Retirement is an exciting time, but it can also be unnerving. If you want to be comfortable in your golden years, the perfect plan is essential. For most forward-thinking people, that includes financial strategies such as investing in retirement plans.
With a variety of retirement plans to choose from, it can be challenging to know which is best for you. If a 401K is your main retirement investment vehicle, consider talking with your advisor about changing to an IRA.
These are some of the benefits of rolling your 401K into an IRA:
Reason #1: Expert Financial Advice
A 401K may have investment options, but it doesn’t include professional financial advice. If you roll your 401K into an IRA through a Certified Financial Planner (CFP), they will also provide professional advice, including expert investment management and retirement, tax, estate, and insurance planning.
Here’s why that matters. 401K statements give you a snapshot of your projected retirement income based on your contributions, but the whole picture is more nuanced. Inflation and other factors also affect the likelihood of a successful retirement. A knowledgeable CFP can tell you if your current investment strategy will allow you to achieve your retirement goals and make recommendations for improvements.
Lastly, if you are not properly invested, this can result in a significant reduction in you’re available retirement assets. Individual investors often make emotional decisions and end up buying high and selling low.
Reason #2: More Investment Options
401Ks often have limited investment options, some of which have costly underlying expense ratios. If that’s the case, you could be using that money to pay a financial advisor for expert advice rather than spending it on mutual fund fees. Some 401Ks only offer mutual funds, which have higher fees than other securities that would be available in your IRA.
In addition, those limited choices within your 401K may not perform well. An IRA with more investment options may result in a higher return on your investment.
Reason #3: Conversion to Roth IRAs
You can’t convert a 401K into a Roth IRA, but you can convert an IRA into a Roth IRA. This flexibility can be a powerful tax planning tool. With an IRA, you have control over this decision and can seek professional advice regarding whether this is the right choice for you.
Earnings from a traditional IRA or a 401K are taxed, but earnings from Roth IRAs are not. This can create an opportunity for tax savings which can reach the six and seven figures! Expert tax advice on Roth conversions is essential.
Achieve Your Retirement Goals with Expert Assistance
At Bestgate Wealth Advisors, LLC, our mission is to develop a long-term trusting relationship with you and ensure you retire successfully. We aren’t just financial planners. We’re tax experts, too. This knowledge means we can provide an integrated approach that includes advanced tax planning. Our team offers retirement planning, tax planning, estate planning, insurance analysis, and investment management. We’d love to meet with you. Contact us for more information.