When you leave a job or retire, you'll decide what to do with your workplace retirement plan. There's no single right answer.
Your four main options
- Leave it in your former employer's plan (if the plan allows it).
- Move it to your new employer's plan (if that plan accepts rollovers).
- Roll it over to an IRA.
- Cash it out. This generally means income tax, and possibly a 10% additional tax if you're under 59½.
What to compare
- Costs: plan administrative and fund expenses versus IRA account and advisory fees.
- Investment choices: a plan menu versus a broader IRA selection.
- Services: the help and tools each option offers.
- Creditor protection: ERISA plans and IRAs are protected differently, and state law varies.
- Withdrawal rules: some plans allow penalty-free withdrawals if you leave your job in or after the year you turn 55. IRAs generally don't.
- Company stock: if you hold employer stock, net unrealized appreciation (NUA) rules may matter before you roll anything over.
- RMDs: if you're still working, some plans let you delay RMDs from that plan.
Our conflict, stated plainly
If you roll assets into an account we manage, we generally earn an advisory fee on those assets. That gives us a financial incentive to recommend a rollover. As fiduciaries, we have to act in your best interest, and sometimes that means telling you to leave the money where it is. Our Form ADV Part 2A and Form CRS describe our fees and conflicts.
Questions to ask any advisor
How are you paid if I roll over? What would I pay in total each way? What does my current plan offer that an IRA doesn't?
To review your options, see our financial planning in O'Fallon page or our 401(k) rollover services, or call (636) 240-5055. Some of our advisors may also earn commissions on certain insurance products.
Renaud & Company, LLC is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training. This material is for educational purposes only and is not individualized investment, tax or legal advice. Investing involves risk, including possible loss of principal.