Rollovers

401k, 403b, 457 & TSP Rollover

If you have a 401k, 403b, 457, TSP or other retirement plan with a previous employer, you should consider the benefits of transferring your retirement assets into a Rollover IRA.

The Rollover IRA is a tax advantaged IRA account designed to receive retirement funds rolled over from an ex-employer’s retirement plan (401k, 403b, 457). The Rollover IRA allows funds to be transferred tax and penalty free from other retirement plans and allows these funds to continue to grow tax deferred until retirement.

When leaving an employer, some investors believe it is advantageous to rollover your retirement plan into a new IRA versus leaving your money in your old employer’s retirement plan or transferring it into your new employer’s plan.

Advantages of a 401k, 403b and 457 Rollover to an IRA

  • Control
    When the rollover process is complete, your retirement plan assets from your previous employer will be transferred to an IRA. Since you are the owner of an IRA, you have complete control versus being dependent upon the rules and policies of your former employer’s retirement plan. By rolling over your account into an IRA will not have the potential problems seen with some 401k, 403b and 457 plans such as untimely statements, lack of account information, or more importantly, a limited number of investment options. Also, there are a number of other problems that can arise with your retirement plan should your employer have financial troubles and go into bankruptcy. Rolling over your retirement plan to an IRA eliminates these problems and puts you in a position to be in complete control of your retirement account.

  • Investment Flexibility
    Your previous employer’s 401k, 403b or 457 plan probably had between 10-15 mutual funds to choose from. A rollover to an IRA will increase your investment options and will improve your investment flexibility. Within an IRA managed by a BCM financial advisor you can invest in stocks, bonds and over 10,000 mutual funds. At Beacon Capital Management Advisors, we believe that over the long term greater investment flexibility may lead to improved performance through better diversification and increased investment selection.

  • Investment Advice
    Are you receiving guidance from a financial professional with selecting the appropriate investments in your 401k, 403b or 457? Probably not. This is perhaps the greatest advantage of a rollover to an IRA. If you opened an IRA rollover account, a BCM financial advisor would help you select a diversified investment portfolio based on your age, time horizon and risk tolerance.

Disadvantages of a Rollover to an IRA

Potentially Higher Fees and Expense Ratios

It is important to compare the expense ratios of the existing retirement plan and compare that to the new investments in the IRA.

Protection from Creditors and Legal Judgments

Generally speaking, plan assets have unlimited protection from creditors under federal law, while IRA assets are protected in bankruptcy proceedings only. State laws vary in the protection of IRA assets in lawsuits.

Learn more about BCM’s portfolio management for clients that perform a Rollover IRA.