To Roll or Not to Roll
That is the question. A quick google search will tell you that over 40 million people quit their jobs every
year. Some for retirement or some for greener pastures (hopefully)! Either way it is usually a decision
that is weighed for long periods of time and is justified by the idea that this will either enhance your
quality of life or size of your bank account. Often lost in the mix of the change is that old retirement
plan your now ex-employer offered.
That Old Retirement Plan
“Hey honey, do you remember the name of the company my old 401k is with? Was it principal? No..it
was tras.. Transamerica? No it was Fidelity! That’s right, I remember now!” -Almost every married
couple I’ve ever talked to.
I have personally witnessed this exact exchange many times. Its understandable! You didn’t go find the
company that offered your 401k, your employer choose for you. All you did was start at a new job and
begin saving into the 401k they provided. Now that you don’t have that job anymore its time to ask
what is it invested in? How is that related to your specific situation or financial plan? Chances are it’s
not. The most likely scenario is its invested in some target date 20XX fund that aligns with the age you
turn 65 years old and is invested in the exact same way for every single person in that fund.
Imagine for a moment that we bought cars in the same way we save for retirement. You would simply
accept that as part of your employment you would need transportation to and from work so your
employer would offer it as they would health insurance or a 401k. On day one you would log on and
find that your employer had a contract with Toyota and your options for a car are either a Camry,
Tundra, or Highlander. Maybe you love Toyota, perhaps you drive one of those cars, they are great
options! However, it is also reasonable to think that just because they are a good option for some does
not mean they are the perfect option for you.
The same applies to investments. It’s not that the Tundra
is bad but perhaps you prefer a F-150 or Dodge Ram because of the seating or towing capacity not
offered in a Tundra configuration. 401ks and group retirement plans provide wonderful benefits for
employees but they are chosen based on the group rather than the individual so they will likely offer
one US Stock market etf or mutual fund when there are nearly 1,200 in that one category alone. It’s
very possible that one of the other 1,200 options in that category is a more ideal match for your financial goals and risk tolerances.
Now that you’re not part of that group anymore it is probably time to consider whether keeping money
in that old 401k is in the best interest of you as an individual. To be fair, there are reasons you would
consider leaving your balances inside a group plan such as low expenses or early distribution
benefits. There are also reasons you would want to consider rolling over balances such as access to
more investments and greater customization for your individual situation. Either way, it’s something
you should resolve to talk to a financial advisor about sooner rather than later.
Austin Lane CFP® is a certified financial planner and owner of Greenwing Wealth Management based in Helotes, TX. He provides both
investment and planning strategy and advice to business and individuals. Austin also serves as the chair for the Helotes Area Chamber of
Commerce. He can be reached at his office in Old Town Helotes at 210-201-0051 or at http://GreenwingWealth.com
Austin Lane, CFP®
President – Wealth & Investment Advisor
Greenwing Wealth Management
14751 Old Bandera Rd. #1101
Helotes, TX 78023
Office - (210) 201-0051
Investment Adviser Representative offering advisory services and securities through Cetera Advisor
Networks LLC, a Broker-Dealer and Registered Investment Advisor, member FINRA/SIPC. Cetera is
under separate ownership from any other named entity.
Before rolling over your retirement account, consider all available options, which include
remaining with your current retirement plan, rolling over into a new employer's plan or IRA, or
cashing out the account value. When deciding between an employer-sponsored plan and IRA,
there may be important differences to consider - such as range of investment options, fees and
expenses, availability of services, and distribution rules (including differences in applicable taxes
and penalties). Depending on your plan’s investment options, in some cases, the investment
management fees associated with your plan’s investment options may be lower than similar
investment options offered outside the plan. Please view the Investor Alerts section of the FINRA website
for additional information.
Distributions from traditional IRAs and employer sponsored retirement plans are taxed as
ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10%
IRS tax penalty.
Mutual Funds and Exchange-Traded Funds are sold only by prospectus. Investors should
consider the investment objectives, risks, charges, and expenses carefully before investing. The
prospectus, which contains this and other information about the investment company, can be
obtained directly from the company or from your financial professional. The prospectus should
be read carefully before investing or sending money.
The target date of a target date fund may be a useful starting point in selecting a fund, but
investors should not rely solely on the date when choosing a fund or deciding to remain invested
in one. Investors should consider funds’ asset allocation over the whole life of the fund. Often
target date funds invest in other mutual fund and fees may be charged by both the target date
fund and the underlying mutual funds. The principal value of these funds is not guaranteed at
any time, including at the target date