You will hardly ever find a person that stays with the same company of employment for the entirety of their career. In fact, more than likely a person will change jobs and companies several times during their life. Since the majority of companies offer a 401k retirement package, these people that change companies may end up holding multiple 401k accounts under their name.
So what should you do when you switch jobs and move to another company with it's own 401k offer? It would behoove you to consider a 401k rollover to IRA.
Rolling your 401k fund into an IRA can be beneficial in multiple ways. I'll briefly discuss a few of them.
For starters, imagine someone who changes companies 3 times in their life. That would leave them with 3 401k's from their previous employers and 1 from their current employer. That can get really messy for you. That means you would have 4 times the paperwork to keep up with and monitor to manage your portfolio the way you should. If you are like me, that extra paperwork may cause you to be lax in managing the account and could lead to financial ruin in your retirement years.
By rolling your 401k into an IRA fund after each job change, you can consolidate that paperwork and make your retirement much easier to manage. And you can continue to add your 401k plans to a single IRA as often as necessary. That same person that changed jobs 3 times in their career would have now only 1 401k and 1 IRA. That would be worlds easier to handle.
Also, consolidating your accounts into an IRA reduces your risk factor. If you leave the 3 previous 401k plans with the previous companies you run the risk of the companies going under. That would in turn leave your 401k worthless. There is still a small risk when you invest in an IRA with a financial institution, but the risk is much smaller than the alternative.
This will also allow you to take control of your planning and that is the creates reward. You don't want to depend on others to take care of your retirement because they can't possibly care as much about it as you do.
But I still recommend that you take advantage of the 401k options your current employer offers. Strive to contribute the maximum amount that they will match because doubling your investment is always a good deal. Then if you are able to contribute more than the maximum, put the extra in your IRA. - 16732
So what should you do when you switch jobs and move to another company with it's own 401k offer? It would behoove you to consider a 401k rollover to IRA.
Rolling your 401k fund into an IRA can be beneficial in multiple ways. I'll briefly discuss a few of them.
For starters, imagine someone who changes companies 3 times in their life. That would leave them with 3 401k's from their previous employers and 1 from their current employer. That can get really messy for you. That means you would have 4 times the paperwork to keep up with and monitor to manage your portfolio the way you should. If you are like me, that extra paperwork may cause you to be lax in managing the account and could lead to financial ruin in your retirement years.
By rolling your 401k into an IRA fund after each job change, you can consolidate that paperwork and make your retirement much easier to manage. And you can continue to add your 401k plans to a single IRA as often as necessary. That same person that changed jobs 3 times in their career would have now only 1 401k and 1 IRA. That would be worlds easier to handle.
Also, consolidating your accounts into an IRA reduces your risk factor. If you leave the 3 previous 401k plans with the previous companies you run the risk of the companies going under. That would in turn leave your 401k worthless. There is still a small risk when you invest in an IRA with a financial institution, but the risk is much smaller than the alternative.
This will also allow you to take control of your planning and that is the creates reward. You don't want to depend on others to take care of your retirement because they can't possibly care as much about it as you do.
But I still recommend that you take advantage of the 401k options your current employer offers. Strive to contribute the maximum amount that they will match because doubling your investment is always a good deal. Then if you are able to contribute more than the maximum, put the extra in your IRA. - 16732
