Consolidating Retirement Funds
Most people wind up switching companies several times in the course of their lives. Hardly ever does a person stay with 1 employer their entire working life. Many companies offer a 401k plan as part of their benefits package. This leaves many people with multiple 401k funds in their name in their career course.
What should you do with your 401k fund after switching companies? You might look into a 401k rollover to IRA.
Transferring your 401K to an IRA fund comes with several benefits. I would like to talk now about a few of them.
First think about someone that switches jobs and employers 3 times in their life. They would have 3 401k plans to their name from the earlier employers and now a new one from their new company. Having so many accounts is very difficult to follow even for someone financially inclined. The paperwork would be 4 times as much as if you only have 1 account. This usually leads to discouragement and eventually the account holder will take less than the necesarry interest in his/her retirement. What a nightmare!
By rolling your 401k into an IRA fund after each job change, you can consolidate that paperwork and make your retirement much easier to manage. And you can continue to add your 401k plans to a single IRA as often as necessary. That same person that changed jobs 3 times in their career would have now only 1 401k and 1 IRA. That would be worlds easier to handle.
Also, consolidating your accounts into an IRA reduces your risk factor. If you leave the 3 previous 401k plans with the previous companies you run the risk of the companies going under. That would in turn leave your 401k worthless. There is still a small risk when you invest in an IRA with a financial institution, but the risk is much smaller than the alternative.
And the best part of it is that you will put yourself in control of your own future. And who better to handle it that the person that cares most about it?
The 401K offers to match your investment 100%, and you don't see an offer like that from most investment opportunities. So take advantage of it and contribute the maximum that the employer will match. Then put the extra funds into your IRA.
What should you do with your 401k fund after switching companies? You might look into a 401k rollover to IRA.
Transferring your 401K to an IRA fund comes with several benefits. I would like to talk now about a few of them.
First think about someone that switches jobs and employers 3 times in their life. They would have 3 401k plans to their name from the earlier employers and now a new one from their new company. Having so many accounts is very difficult to follow even for someone financially inclined. The paperwork would be 4 times as much as if you only have 1 account. This usually leads to discouragement and eventually the account holder will take less than the necesarry interest in his/her retirement. What a nightmare!
By rolling your 401k into an IRA fund after each job change, you can consolidate that paperwork and make your retirement much easier to manage. And you can continue to add your 401k plans to a single IRA as often as necessary. That same person that changed jobs 3 times in their career would have now only 1 401k and 1 IRA. That would be worlds easier to handle.
Also, consolidating your accounts into an IRA reduces your risk factor. If you leave the 3 previous 401k plans with the previous companies you run the risk of the companies going under. That would in turn leave your 401k worthless. There is still a small risk when you invest in an IRA with a financial institution, but the risk is much smaller than the alternative.
And the best part of it is that you will put yourself in control of your own future. And who better to handle it that the person that cares most about it?
The 401K offers to match your investment 100%, and you don't see an offer like that from most investment opportunities. So take advantage of it and contribute the maximum that the employer will match. Then put the extra funds into your IRA.
posted by Credit Counseling at
10:44 AM
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