If you have been working for the same employer since the day that you entered your career and are sure you will retire from the same position with the same company down the road, then move on and don’t worry about what we are about to talk about.
However, everyone else needs to stick close and continue reading.
The question that everyone should ask themselves is, did you end up leaving money behind when you left your last job?
If you think you may have, then now is the time to go back and get the money that is yours. Even if the amount of money you left is considerably small, it is actually where you left it that could lead to major regret down the road.
Leaving a Balance in your Previous Employer’s Retirement Plan
A lot of employees do not realize that they have actually left money behind when they move onto a new job. In fact, many still receive statements and are under the impression that they can go back and collect the money whenever they choose.
In truth, you can go back and claim that money as long as the company you worked for remains in business, but the privilege of having them hold onto your money can actually cost you.
Losing Money with your Old 401k Balance
There are a number of high annual fees that are taken in order to plan for a 401k plan and each year you are paying mutual fund managers around one to two percent to manage your money.
And it gets even worse from there.
When your money is invested in a 401k plan, you have very few options and can often only choose from a few select mutual funds. However, if you took the money out of the plan and rolled it into an IRA, you would be given the option to invest the money in practically anything that you wish. Better yet, the move will actually end up costing you no money at all, especially if you opt for a discount brokerage such as Fidelity or Charles Schwab.
You will not be paying the increasing fees that come along with your old 401k plan, and the extra options will allow you to diversify your portfolio and make the most of your money. And that is truly the way to fund the retirement that you are dreaming of, rather than sitting back, waiting, and wishing that your old plan would do all the work for you.
If you have switched jobs, or been laid off in the past few years, now is the time to roll over your 401k balance even though you have much more on your mind and other priorities. New government regulations and policies have made it easier than ever to make the rollover a possibility, and the sooner you make the move, the sooner you will be able to benefit from all the advantages that come along with it.
A comfortable retirement doesn’t come about from crossing your fingers and hoping for the best. It comes from smart planning, well thought-out decisions, and a willingness to take advantage of the options that are available. Just be sure to get in touch with experts and make sure that your final decision is the right one for you. While Roth IRAs are attractive and can be incredibly beneficial, you want to make sure that any financial decision that you make is right for your unique situation.