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401k, IRA & Pension Rollovers

The Pursuit of Financial Independence

If you have a 401(k), pension, or some other retirement plan with a previous employer, you should strongly consider the benefits of transferring your retirement assets into a Rollover IRA or a Traditional IRA. The expert staff at Brolen Davis are familiar with making this transition for our members which is why we can easily walk you through this process.

A Rollover IRA or Traditional IRA is a tax advantaged IRA account designed to receive retirement funds rolled over from an ex-employer’s retirement plan. The IRA rollover allows funds to be transferred over tax free and penalty free from other retirement plans and allows retirement funds already set aside to continue to grow tax deferred until retirement. When leaving an employer whether voluntary or involuntary, many experts believe there are advantages to rolling over your 401(k) or other retirement plan into a new IRA versus leaving your money in your old employer’s retirement plan or transferring it into your new employer’s plan. We advise seeking a financial advisors’ recommendation on the right allocation options for you.

Advantages of an IRA Rollover/Traditional IRA

  • Control – When the rollover process is complete, your past 401(k), pension or other retirement plan assets from your previous employer will be transferred to an IRA. Since you are the owner of an IRA, you have complete control versus being dependent upon the rules and policies of your former employer’s retirement plan including partial or full distributions.
  • Investment Flexibility – Your previous employer’s 401(k) probably had a limited number of investment options funds to choose from and in some cases had a certain percentage of your investments in their company stock. A rollover to an IRA will increase your investment options and will improve your investment flexibility. We believe that over the long term, greater investment flexibility may lead to improved performance through better diversification and increased investment selection.
  • Investment Guidance – Are you receiving guidance from a financial professional with selecting the appropriate investments in your qualified retirement plan? This is perhaps the greatest advantage of a rollover to an IRA. If you opened an IRA rollover account, a Brolen Davis financial advisor will help you select a diversified investment portfolio based on your age, time horizon and risk tolerance. Schedule a free consultation, where you’re able to meet with a financial advisor to discuss your future goals.
  • Sound Investment Philosophy and Investment Selection – Our active investment philosophy is designed with an objective to participate in market gains and limit losses in declining markets while seeking a rate of return consistent with one’s investment objectives and risk tolerance. Our investment selection is not only based on competitive advantages they may have, but for investments that we believe will stay competitive. Our investment committee researches, tests and scrutinizes everything from strategies, costs, risk, management stewardship and long-term performance for our members. We are focused on fundamentals and are more patient with short-term underperformance. It has been our experience that if you concentrate solely on short-term performance one would constantly be chasing returns which often leads to being whipsawed back and forth, in other words buying high and selling low.

Disadvantages of an IRA Rollover/Traditional IRA

  • Potential tax consequences if the rollover isn’t executed properly.
  • Company sponsor plans may have provisions which all you to take a loan instead of having to take a withdrawal in an IRA only if employed or while employed.
  • Company sponsor plans allow you to take a distribution after you reach age 55 and are no longer employed without incurring a 10% penalty as with an IRA. An IRA can be set up to take a distribution before age 59½ without a penalty however you need to take a distribution from your accounts for 5 years in equal payments.
  • Might not have access to investments inside your retirement plan such as company stock purchasing plans.

Gone are the days when workers could depend totally on Social Security and company pensions to achieve a successful retirement. Today, people are realizing that working toward their retirement goals requires careful planning and making the most of employer-sponsored plans, such as 401(k) plans. For most American workers, their 401(k) will be the cornerstone for their retirement savings, especially with the correct allocations.

However, this assumes that one possesses the time and knowledge to navigate the investment landscape with reasonable success. We find that most people are better savers than investors. Our members who are still working can take benefit from our 401(k) enhancement program which will provide recommendations specific to your risk tolerance and your plan’s options. This service is available until the client retires or terminates employment.

Take charge of your future, schedule a complimentary consultation by calling 704-441-3300. One of our financial advisors would be happy to discuss your options today.

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