What is the easiest way to handle a Retirement Plan that was set up through a previous employer?

Michelle Bertram and Beverly Bertram are financial advisors living in Mineral Point WI and serving the surrounding communities. Michelle Bertram does financial planning for retirees along with business consulting. Beverly Bertram specializes in retirement planning and income planning for her clients. Michelle Bertram and Beverly Bertram are authors of the book, Creating You DREAM Retirement and creators of the DREAM Retirement Process. Serving Madison WI, Verona WI, Mount Horeb WI, Barneveld WI, Dodgeville WI, Dubuque IA, Platteville WI, Lancaster WI, Cuba City WI, Fennimore WI, Darlington WI, Monroe WI, Spring Green WI, Black Earth WI and beyondJust to clarify, a retirement plan with an employer could be a 401(k), 403(b) or Simple IRA. The question on what to do with those accounts when you switch jobs is very common. The easiest option at the moment is to leave it where it is, but that might not be the best long-term solution. Let’s look at some points to consider before making your decision.

Qualified Plan Consolidation

While leaving your plan where is the easiest, simplest option at the time, it can lead to having accounts all over later. So the question becomes, it that really easier in the long run? Do you want to keep statements from multiple accounts? When you retire, how hard will it be to access your money to create an income plan? Many employers require their own forms and company signatures to access the accounts, so it can be a long process. Consolidating retirement accounts usually means easier management long term.

More Investment Options

The options of the investment universe open up to you outside a company plan. This is especially true for the conservative investor. When you roll your 401k to an IRA, all the colors of money are open to you. You can put the IRA in Yellow Money to have total liquidity. However this may not be a good option if you need income for retirement. You can move to green money with the three Green Money Rules: Protect your Principle, Retain your Gains and Guarantee an income if and when needed, for life. You can also invest in red money with more options and better control over the risk you take within your plan.

More Beneficiary Options

Much like the lack of investment options for conservative investors the company sponsored plan offers limited opportunities for serious estate planning. The of Stretch IRA is not available without careful planning from most company-sponsored plans. Not having this option for your beneficiaries could cost your family thousands!

While transferring to your new company plan helps you consolidate, it still limits your investment and beneficiary options. Rolling your account into your own IRA opens up the doors of options. This may feel overwhelming, so I would suggest working with a retirement advisor to navigate the process and guide you to what is best for your situation.