 They used to say that a home is generally the biggest investment you’ll ever make. Whether this maxim will remain true is unclear. Although home prices have skyrocketed, so have retirement assets, which today account for about one–third of all household financial assets. (1)
It’s possible, even likely, that the money you are putting away for retirement could someday surpass the value of your home. When you consider the care with which you treat decisions about your home, doesn’t it make sense to be just as careful with what could someday be your most valuable possession, your retirement income? An IRA rollover is one way to give you the maximum control over your retirement assets.
IRAs tend to have more flexible rules than employer–sponsored retirement plans. This could affect everything from how you customize your investment choices to the way in which you name your beneficiaries. IRAs tend to have fewer restrictions, which could help your beneficiaries avoid rules that some employer plans place on inherited assets and could make it easier to stretch the account into possibly decades of tax–deferred growth potential. IRAs typically offer more investment options than company plans. It’s Easy On its surface, an IRA rollover might seem to be more like a paperwork hassle than a smart move. In fact, the safest way to roll over money from an employer–sponsored retirement plan to an IRA is by making sure the money never comes into your hands, in order to avoid current taxes and penalties. With a direct (trustee–to–trustee) rollover, all you need to do is provide the instructions and the financial institutions can usually take care of the rest. Distributions from traditional IRAs and most employer–sponsored retirement plans are taxed as ordinary income and may be subject to an additional 10% federal income tax penalty if taken prior to reaching age 59½. Of course, you can’t conduct a rollover until you separate from your employer. But if you have retirement assets in former employer–sponsored retirement plans, you might want to get started by rolling them into an IRA now. 1) Investment Company Institute, 2006
Reasons to Roll
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