Changing jobs? Be aware of these rollover mistakes!

Changing jobs?  Be aware of these rollover mistakes!
30 Mar 2016

So for whatever the reason, you are switching jobs. Your new employer has a great 401(k) with tremendous matching and you immediately signup. But what about that old plan you have, what should you do? Here are a few options and suggestions:

1) You can leave the money where it is. You will want to check the expenses that you are incurring as well as the service you are receiving, if any. I recall a recent study that said many Americans thought their 401(k)s had no annual expenses! Also, remember most 401(k)s have very limited investment options and choices so you will want to make sure the options are what you are looking for to achieve diversification. We don’t see this as an overly popular option.

2) You can roll the money into your new plan. Remember though, you will not receive a company match on the rollover money. I actually had someone believe they would be receiving a match on the rollover proceeds! Wishful thinking. Again, you are back to the same issues with #1 above and when you leave your new employer (which statistics say you will) you will have the same decision all over again.

3) You can “rollover” the proceeds to a self-directed IRA. This is a popular option because you can gain control of your money. You will have many more investment choices and, to some extent, more control over the expenses you will incur.

Make sure you do this correctly or you can incur unwanted taxes and/or a penalty if under 59.5. I would suggest you consult with a professional to navigate you through your options. Feel free to reach out to one on our Premier professionals at anytime!

Good luck!
Jeff

Share

Jeffrey Johnston

Jeffrey is originally from Solon, Iowa. He currently resides in Swisher, Iowa with his wife, Prudence, and his three children, Seth, Ian, and Roman. He graduated from the University of Northern Iowa in 1989, where he majored in Finance and Investments. He has 24 years of experience in the investment and estate planning business. He is currently the President of “Premier Investments of Iowa, Inc.” Jeffrey’s main focus is Estate and Investment Planning for Senior Citizens and Pre Retirees. Jeffrey became a Chartered Financial Consultant (ChFC) in 2001. He is the author of many articles on industry related topics and he is a frequent seminar presenter. He is a Board Member TRIAD Linn County Seniors Against Crime, and he is also a past Board Member of the Heritage Area Agency on Aging Task Force. He is a member of CEO Roundtable in Cedar Rapids, a Daybreak Rotary Member, and a member of the Cedar Rapids Estate Planning Council. In March of 2009, Jeffrey became the host of the Premier Investments of Iowa Financial Hour which airs every Tuesday Evening from 6PM -7PM, on WMT 600 AM Radio. In his free time he enjoys golf, fishing, scuba diving, traveling, and coaching son’s basketball teams.