401k Rollovers to IRA

What to Do With Your 401k When You Change Jobs

If you switch jobs or retire and have a workplace 401k or 403b, you may choose to perform a "direct rollover" into an Individual Retirement Account (IRA).¹ We can help you to determine whether a direct rollover is appropriate for you, and if so, help with this process, which typically involves filling out paperwork or making a phone call.

Direct rollovers of 401k and 403b plans into IRAs are not taxable events and do not result in penalties, provided they are executed correctly. By transferring your retirement savings into an IRA, you can continue to enjoy the benefits of tax-deferral.

Compared to workplace retirement plans, IRAs tend to offer increased investment flexibility. 401k and 403b plans typically have a limited selection of mutual funds and may not provide the investment options necessary to build a diversified, low-cost portfolio.

In addition, mutual funds within 401k and 403b plans often come with high expense ratios as well as record-keeping and administrative fees that can reduce investment returns over time. Moving your assets from a 401k into an IRA allows you to invest in a variety of low-cost, diversified index funds and eliminates record-keeping and administrative fees.

Consolidating your retirement assets in a personal IRA each time you change jobs can help reduce financial complexity over time. At One Day In July, we can help manage your IRA using a variety of low-cost index funds that match your goals and risk tolerance. We use Vanguard and iShares ETF index funds to construct diversified portfolios for our clients in accounts held at Charles Schwab.

The One Day In July office in Wayne, PA provides investment management services as fee-only fiduciary financial advisors to the greater Philadelphia area, the Main Line, and surrounding communities including Villanova, Radnor, St. Davids, Wayne, Strafford, Chesterbrook, Devon, Berwyn, Paoli, Malvern, King of Prussia, Valley Forge, Havertown, and more.

If you need assistance determining whether to move a previous workplace 401k, 403b, or 457b plan to an IRA, please contact us today to set up a free consultation. We can meet in person if you're in the area or set up a phone call or Zoom meeting if you prefer.

1. The decision to rollover a workplace retirement plan into a personal IRA account should be considered on a case-by-case basis, as it may not always be the most prudent choice, depending on the specific facts and circumstances of the case.