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To Rollover or Not to Rollover

Posted: February 12, 2008 8:25 p.m.
Updated: April 10, 2008 2:01 a.m.
When you leave a company where you have money invested in a tax-deferred retirement plan, such as a 401(k), you will be faced with a decision: What to do with the money accumulated in your account. While you may have the option to leave the money in your former employer’s plan or withdraw it as cash, it often is more advantageous for you to “roll over” those funds into a Rollover IRA (Individual Retirement Account).

While this may sound like a simple decision, it could have far-reaching implications for your financial future. It is advised that you discuss your options with your financial advisor about whether a Rollover IRA is the right choice for you.


What is a Rollover?
A rollover is simply the transfer of assets from one retirement plan to another, so it remains invested rather than withdrawn as cash. To maintain the tax-deferred advantages of the money invested in your retirement plans (and avoid paying early withdrawal penalties), you must roll these funds into another tax-deferred plan in accordance with the rules that govern when you can do a rollover (for example, when you leave a company) and the related deadlines. The main types of accounts eligible for transfer to a rollover IRA include 401(k) plans, 403(b) plans, Simple IRAs and stock ownership plans.


Rollover advantages
Convenience: By transferring your tax-deferred assets into a single Traditional IRA or Roth IRA, you can avoid the hassle of monitoring numerous statements and the need to understand investment options from multiple providers. And you can take advantage of multiple investment options within your Rollover IRA.

Consolidation: Having your assets in one place makes it easier for you and your advisor to select and manage your investments, and create an effective portfolio to meet your long-term financial goals.

Control: If you keep your funds in a former employer’s plan, you may not have full control over how to best invest. With a Rollover IRA, you choose the investment managers you prefer. You also gain more control over how your assets are distributed to your beneficiaries.

Transferring your hard-earned assets to a Rollover IRA with the convenience, consolidation, and control you desire may help you achieve the retirement of your dreams.

As a final point, you may consider a Variable Annuity that has very flexible Income riders that will guarantee your principal, guaranteed growth for delayed income and guaranteed income for life. I believe when structured properly, Variable Annuities have a place for some portion of a retirement portfolio.


Jim Lentini, CLU, ChFC, IAR, is president of Lentini Insurance & Investments Inc. His column represents his own views, and not necessarily those of The Signal.

Copyright: The Signal


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