What to do with an Old 401k or IRA Account?
What happens if you have an old 401k or IRA account from a previous employer?
Most Financial Advisors will give you four options:
- First, just leave your account where it is. This is what most people do when the balance is above $5,000.
Is this a good idea? Most of the time, no. As it will be set into an account that is not watched with excess fees and put into junk funds. Your money will not grow, and you may have less and less each year. Just open up your statements and check them out.
- Second, roll it over into your new employer’s plan if they offer that solution.
Is that something worth doing? You may not be eligible to participate in the new plan. If you are, is the plan with an A+ rated company, that will insure your money against loss; then, yes. The problem is, there very few companies offer that option.
- Third, create a new IRA or combine it with another existing IRA.
What about this idea? The same outcome as above, the question is; how will it perform?
- Forth, take a cash distribution.
That is a bad idea with some serious tax consequences with that. When you retire, you can start to take distributions after the age of 59½. You also must start taking out at least the minimum withdrawals when you hit 72. So, if you do it before, that will be a 10% penalty or more and that can be a big problem. Many today in the COVID era are doing this with some lifted regulations. However, it is not available to everyone and, it gets very completed. You will need a qualified CPA, and you may pay taxes on it and excess fees too. Worst yet, that money will no longer help you when you really need it.
How is my 401k performing? You can check out the rating and productivity of your 401k, IRA and other retirement accounts. Those from your current workplace and companies you no longer work at. Then you can see how it is performing: www.brightscope.com
So, is there a better way? Yes.
The solution is to roll it into a high-growth Annuity. This is a contact with an insurance company to guarantee your money so there is no loss and a high 8-12% growth rate and will be distributed for your benefit. It has tax advantages that are far super to any ROTH, IRA, or 401k. Plus, there are no age limitations or caps what you can put into it!
Rollover your old IRA, 401k, or any retirement account into a high-performing top-rated company that is over one hundred years old.
But, it needs to be in the right type of account that has growth advantages and where your money is secured, so you will not lose any of it. This is the best way to take an old IRA or 401k and take out your money that you contributed and “rolled it over” from one qualified retirement plan into another qualified plan. With high growth annuities, there are no penalties to roll them over.
What are the downsides?
- The Downside is leaving it an account that your money will not grow, have excess fess and your money could be lost.
- When your old 401k is no longer having any company matching funds; then the growth rate is usually more of a loss rate. Keep in mind that company retirement plans usually benefit the company and service provider, not the employee. There are better choices out there that we can help you with.
- You may not be able to move your current IRA or 401k. You can usually only roll over an old 401k from a company you used to work for. Current employers usually do not allow you to take them out as they use that money for their balance sheets; even though it is not their money. Although, some companies will allow you, so check with your HR department.
- Traditional IRA and 401k’s are usually in volatile markets with high fees.
- Most 401k’s do not have any protection for your money. There are no guaranteed income streams. There is no loss prevention or index strategy and there can be fewer tax advantages too.
So, would you rather gamble with your retirement or have something guaranteed?
What are the upsides?
- You can have a guaranteed income stream. You can protect your money, so there is no loss. And you can have an index strategy, that the wealthy use. And there can be significant tax advantages for you too.
- You can take advantage of the IRS tax codes, like the Rollover 1035, this allows taking a bigger sum into the account that is not limited to income or annual amounts.
- Remember, an Annuity or FIA is your account, not a corporation’s. It is better to have no fees and am account that can grow your retirement income further and faster and better with an index strategy.
- You can have Living Benefits, usually are a rider, like in a good insurance policy. They help cover you when you have a chronic illness, critical illness, terminal illness, and even death benefit protection. So, you are covered and properly protected. You can be covered as long as you need your benefits to last.
So, would you rather gamble or have something guaranteed?
Here is a story that tells you how this works.
Joe Brown, a 55-year-old male, who has, $1 million from several different 401k bad performing accounts. He wants to roll over them into an A+ company. He also has an old $100k whole life policy. He has a budget of $1,000 a month for 10 years. He has a participation rate of 175% and will cap at 15%. He ends up 6.8+% for 2020, while others are hemorrhaging. And, he has an income for life rider.
Wait for it; this is huge: He puts $1 million in and gets $5 million out when he retires! Wait there is more, he also has Living Benefits and a $250,000 death benefit too. If he kept his money in those accounts he would end up having less than 500k for retirement.
Would you rather have your money where it is guaranteed against loss?
The three ways that money grows. The first is fixed like a CD. The second is variable, like a mutual fund; volatile. The third way is called an Index Strategy. Where your money grows when the market goes up and, when the market goes down your money is safe. As it is insured against loss.
How would you like your money to grow?
Allow us to help you!
We are licensed and experienced financial professionals working with A+ rated companies that are over 175 years old. We set up and service IRA’s 401k’s and Annuities, so it is up to you what you want. We can take a bad IRA and put it into an FIA or another retirement vehicle with tax advantages and guaranteed income with no loss into a personal pension plan for you!
We are not captive to any company. We can also set up better 401k plans for your business and employees too. So, we can see what the best solutions for you are and help you with a plan.
How can we be your solution finder today? firstname.lastname@example.org
Dr. Richard Krejcir is a pastor and a licensed and experienced Financial Consultant with over thirty years of experience. He has worked for major banks, insurance companies, nonprofits, and families too. He is also an author, Special Ed Teacher, and financial blogger and holds a doctorate in Stewardship.