Issue Date: July 27, 2008
Move your 401(k) when you leave a job
When I left my previous employer, I had $50,000 in my 401(k) account. A financial adviser at my bank says that I shouldn't leave the money in the hands of my former employer because it maintains partial control over my account. Is that true?
Sharon Standke, Chandler, Ariz.
Your financial adviser is right. "Rolling over" the money from your 401(k) into an IRA at a bank or brokerage is a great way to keep your retirement savings under your control. Most companies let you withdraw funds from the 401(k) as an "eligible rollover distribution" when you leave a job and place the money in a rollover IRA. Earnings on these funds continue to grow tax-deferred as long as they're in the IRA.
Another great advantage of a rollover IRA vs. a 401(k) is the breadth of investment choices. Instead of a staid menu of funds via your old employer, you can spice up your portfolio with your choice of stocks, bonds, mutual funds and alternative investments.
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