401K rollover to standard IRA
Hi Terry,
My name is Ivan and I have recently retired at age of 69. I have 401K from my employer. Currently 100% of the money in the 401K are invested in the most conservative way – Money Market.
Is it better to rollover the 401K to a standard IRA or I can keep the money where they currently are?
Also, if I will start in the future monthly distributions, is it better distributions to be from an IRA or they can be from the 401K account?
What happens if the employer change in the future the 401K investment company? Will my money be moved as well to the potentialy new 401K investment company?
I have also a bank standard IRA with IMMA, but the rate of return is minimal and the money are FDIC insured.
Vanguard and Fidelity offer rollover IRA’s, but they are not FDIC insured and I’m hesitating to open such an account and to rollover. I’m leaning more to a conservative way of investment, rather than risky investments.
What is your opinion?
Best regards,
Terry Says
You — and millions of baby boomers — are facing this decision.
First, I’m surprised that you have a money market option inside your 40l(k) plan. Are you sure that is where your money is now?
I generally recommend that people do a rollover to a place like Fidelity, Vanguard, or Schwab when they retire — because most 40lk plans only have more aggressive investment choices, designed to help younger workers grow their accounts for future retirement.
Here is the article that describes that rollover process:
https://www.terrysavage.com/rollover-now/
Now, that still leaves you with the question of how to invest your rollover money. That depends on your age, your risk tolerance, your other savings — and your spending plan (how soon you need to withdraw money to live on). That’s all something that should be reviewed with someone who is not trying to sell you anything!
That’s why this would be a perfect time to do some high-level retirement income, tax, estate, and healthcare planning. You should get that from a fee-only FIDUCIARY advisor. The only way I can be sure that you will not be in the hands of someone trying to sell you something is if you go through this process. Click this link — and watch the video.
