Consolidate Your 401k's Into An IRA
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.
So what should you do when you switch jobs and move to another company with it's own 401k offer? It would behoove you to consider a 401k rollover to IRA.
Rolling your 401k fund into an IRA can be beneficial in multiple ways. I'll briefly discuss a few of them.
For starters, imagine someone who changes companies 3 times in their life. That would leave them with 3 401k's from their previous employers and 1 from their current employer. That can get really messy for you. That means you would have 4 times the paperwork to keep up with and monitor to manage your portfolio the way you should. If you are like me, that extra paperwork may cause you to be lax in managing the account and could lead to financial ruin in your retirement years.
Putting your previous 401k accounts into an IRA will consolidate your retirement plans and make life a lot easier. You will reduce paper and be able to pay better attention where it counts. Changing jobs 3 times would not matter. You could roll as many 401k's as you'd like into the one IRA. And the person above would only have 2 accounts instead of 4 (1 IRA and 1 401K with the current employer.
By leaving your 401K plans in the management of your previous employers you also increase the risk of losing your retirement savings. Those companies may go under and leave you with next to nothing. But rolling over the accounts all into your personal IRA with a financial institution reduces your risk factor a great deal.
This will also allow you to take control of your planning and that is the creates reward. You don't want to depend on others to take care of your retirement because they can't possibly care as much about it as you do.
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.
So what should you do when you switch jobs and move to another company with it's own 401k offer? It would behoove you to consider a 401k rollover to IRA.
Rolling your 401k fund into an IRA can be beneficial in multiple ways. I'll briefly discuss a few of them.
For starters, imagine someone who changes companies 3 times in their life. That would leave them with 3 401k's from their previous employers and 1 from their current employer. That can get really messy for you. That means you would have 4 times the paperwork to keep up with and monitor to manage your portfolio the way you should. If you are like me, that extra paperwork may cause you to be lax in managing the account and could lead to financial ruin in your retirement years.
Putting your previous 401k accounts into an IRA will consolidate your retirement plans and make life a lot easier. You will reduce paper and be able to pay better attention where it counts. Changing jobs 3 times would not matter. You could roll as many 401k's as you'd like into the one IRA. And the person above would only have 2 accounts instead of 4 (1 IRA and 1 401K with the current employer.
By leaving your 401K plans in the management of your previous employers you also increase the risk of losing your retirement savings. Those companies may go under and leave you with next to nothing. But rolling over the accounts all into your personal IRA with a financial institution reduces your risk factor a great deal.
This will also allow you to take control of your planning and that is the creates reward. You don't want to depend on others to take care of your retirement because they can't possibly care as much about it as you do.
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
3:47 AM
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