Follow Creighton Linkedin Facebook
Email Creighton Email
Financial
Sep 15, 2020

Is It Time To Move Money From Old Retirement Plans?

Sponsored Content provided by Creighton Hayworth - Associate Financial Advisor, Ameriprise Financial

Over the course of their lifetime, the average American changes jobs 12 times and works for 5-7 different employers1. If this rings true for you, you may be among the millions of people who have started 401(k) or 403(b) plans with multiple companies over the years.
 
If you have money sitting in those old workplace retirement plans, you may be wondering what to do with them. There are three primary actions to consider:
 

  • Roll over the funds into an IRA
  • Keep your accounts with your former employer
  • Roll your old accounts into your current employer’s plan
 
Here’s what you should know about each option.
 
Roll over the funds into an IRA
 
All too often, it becomes easy to forget about your retirement accounts that were established through savings plans offered by previous employers. The longer you are away from that job, the more removed you may become from the retirement plan that you left behind.
 
One popular option to consider is to roll any “orphaned” workplace retirement plans into an IRA. This can help you consolidate assets in a single account and keep better tabs on how the money is invested and how those investments are performing.
 
Among other reasons to consider moving money from a workplace plan to an IRA:
 
  • You typically have a much wider choice of investment options in an IRA. In most workplace plans, the investment universe is limited.
  • With an IRA, you own the account. This is in contrast to a 401(k) where you are a participant in a plan, but not the account owner.
  • Having all of your retirement savings in a limited number of accounts makes it easier to manage your asset allocation strategy. You’ll feel more confident that your investments are working well together.
 
If you are past age 591/2 and have money in a workplace retirement plan where you currently work, your employer may offer the option to roll some or all of the money from that plan to an IRA. This so-called “in-service distribution” allows you to move assets to an IRA even while you continue to work with your employer. In some cases, your ability to continue to contribute to the workplace plan may be suspended for several months if you utilize the in-service distribution option.
 
Keep your accounts with your former employer
 
In some instances, it may be advantageous to retain money in your existing 401(k) or 403(b) plan. This is most beneficial if:
 
  • Company stock is included in the plan. There may be more tax-advantageous ways to access those assets when you take distributions from the plan;
  • If you stop working at age 55. You have the ability to access money from your workplace plan without incurring a 10% penalty (normally, you must wait until age 59-1/2 to avoid a penalty); or
  • You intend to keep working beyond age 72. If that’s the case, money in your workplace plan is not subject to required minimum distribution (RMD) rules until you actually stop working. However, traditional IRAs are still subject to RMDs even if you remain employed.
 
Roll your old accounts into your current employer’s plan

Not all employers will accept 401(k) or 403(b) rollovers from a previous employer’s plan, so check with your new employer before making any decisions. If the option is available to you, benefits may include:
 
  • Your money will have the chance to continue to grow tax deferred.
  • Having only one retirement account can make it easier to manage your retirement savings.
 
But before making this decision, make sure to fully understand the rules of your employer’s plan and consider the range of investment options available within it.
 
Assess your circumstances carefully
 
Should you leave it or roll it? The answer depends on your own circumstances. Talk to your financial advisor about the best strategy for your retirement savings. Be sure to consult with your tax advisor as well to make sure you understand the tax consequences of any decisions you make.
 
Source: 1 U.S. Bureau of Labor Statistics, 2019. "Number of Jobs, Labor Market Experience, and Earnings Growth: Results from a National Longitudinal Survey."
 
Creighton Hayworth, Associate Financial Advisor, is with Carolina Capital Advisors a financial advisory practice of Ameriprise Financial Services, LLC in Wilmington, NC.  He specializes in fee-based financial planning and asset management strategies and has been in practice for 2 years. To contact him visit his website by clicking here or call (910) 821-9010. His office is located at 7741 Market Street, Suite F, Wilmington, NC 28411.
 
Investment advisory products and services are made available through Ameriprise Financial Services, LLC., a registered investment adviser.  
 
Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.
 
Ameriprise Financial Services, LLC. Member FINRA and SIPC.
 
© 2020 Ameriprise Financial, Inc. All rights reserved.                 
 
Creighton Hayworth is an Associate Financial Advisor with Carolina Capital Advisors, a financial advisory practice of Ameriprise Financial, LLC. He specializes in providing comprehensive goal-based financial advice. Carolina Capital Advisors has two office locations in eastern NC, one of which is in Wilmington, NC.

Carolinacapitaladvisors2
Ico insights

INSIGHTS

SPONSORS' CONTENT
Tommytaylor ceo unitedway

How Philanthropy Fits Into Your Financial Plan

Tommy Taylor - United Way
Untitleddesign4

Paving the Way to Better City Streets

Tony Caudle - City of Wilmington
Untitleddesign5

The Transformation and Evolution of Leadership

John Monahan - Vistage

Trending News

OPINION: The Case Against A 135-foot Cape Fear Memorial Bridge

Isabelle Shepherd - Jul 15, 2024

Payne Named Director Of Development At Hill School

Staff Reports - Jul 16, 2024

College Road Shopping Center Sells For $8.5M

Cece Nunn - Jul 16, 2024

Jones Tapped As WARM NC's CEO

Staff Reports - Jul 16, 2024

Once Slated For Apartments, Site Off Market Street Could Get 60 Townhomes

Emma Dill - Jul 15, 2024

In The Current Issue

On BHI: Croquet, Anyone?

The Bald Head Island Croquet Club has produced its fair share of hard-hitting croquet crusaders, with past club members Bill and Billie Jean...


Manufacturer Sees Need For Speed

Within five years, Protocase aims to establish a manufacturing facility that could employ around 400 people....


Nonprofit Groups, Governments Aim To Preserve Area Trees

“If you speak to individuals, no one is against trees,” said Dan Camacho, the new executive director of the nonprofit The Alliance for Cape...

Book On Business

The 2024 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2024 Power Breakfast: The Next Season