A 401k rollover of savings and other retirement plans from prior employers is a common ongoing occurrence.
Once individuals become aware of the advantages associated with enhanced performance, better and more complete investment choices, unrestricted and cost free exchanges between funds, and perhaps even a death benefit to heirs, the decision to implement a 401k rollover frequently makes good economic sense.
Generally, individuals currently employed cannot rollover their account to another carrier or an IRA; however, some major companies do permit a rollover to an IRA by active participants.
In our view, from a company’s perspective there are some good reasons for permitting a rollover to an IRA by active participants.
Generally, when one leaves the employ of a company, one has the option to roll their savings into their new company's plan, if available, or into a personal IRA or a rollover IRA.
Frequently, the choice is made for a rollover into an IRA because of the great flexibility and vast array of individual choices available, including: stocks, bonds, mutual funds, fixed annuities, bank CDs, foreign currency bank CDs, variable annuities, indexed annuities, investment real estate, precious metals, etc.
Once in a rollover IRA, the participant is not relegated to the investment choices offered by the company or not-for-profit organization, nor, is the participant subject to any potential future restrictions imposed by the new employer, if any.
Once in a rollover IRA, the participant is permitted to move their savings for whatever reason to other investments within his/her rollover IRA as desired.
Once in a rollover IRA, the account owner, if IRS eligible, is permitted to convert their account(s) to a 401(k) Roth IRA.
Retirement plans can be readily rolled from mutual funds to variable annuities to fixed annuities to bank CDs to equity indexed annuities to stocks to bonds etc; or, from one mutual fund complex to another fund, or from one annuity to another, etc. Sales charges might or might not apply.
There are a number of considerations regarding rollovers and the selection of the proper mutual fund, variable annuity, fixed annuity, indexed annuity etc. is of major importance.
All Mutual Funds, Variable Annuities and Variable Life Insurance policies are offered by prospectus ONLY. For complete information including charges and expenses obtain a prospectus, and read it carefully before you invest.
Mutual Fund, Variable Annuity and Variable Life Insurance prospectuses are available directly from the issuing companies when product information is requested, and in some cases, they can be downloaded directly on the issuing company's internet website.
The tax deferral characteristic associated with variable annuities and other annuities is not needed when used in a rollover retirement account that is by definition tax deferred (retirement accounts) and according to some sources variable annuities generally have higher fees and internal expenses than mutual funds.
Systematic and dollar cost averaging within Mutual Funds, Variable Annuities and Variable Life Insurance policies does not assure a profit and does not protect against loss in declining markets. It involves continuous investment in securities regardless of fluctuating prices and the investor should consider his or her financial ability to continue purchases through periods of low price levels.
Investing in stocks, bonds, mutual funds and variable annuities does not guarantee a profit. All of these investments can lose money.
Stocks, bonds, mutual funds and variable annuities are not FDIC insured.
