IRA Rollovers

If you are leaving your job or retiring, you need to decide what to do with the money you've saved in your employer's retirement plan. This could be one of the most important financial decisions you will ever make, because your choice will affect your retirement and financial status in the future. We're specialists and are here to help you. Call us today to discuss your retirement plan options.


Retiring or Leaving a JobHouston Skyline

When you retire or leave a job, you have four choices as to what you can do with your retirement plan:

  • Take your money out in a lump sum
  • Leave your assets in the previous plan, if allowed
  • Roll all or part of your assets to your new employer's plan (if changing jobs)
  • Move your assets into a "rollover IRA"


The option you choose should be determined by your specific needs and goals; in order to decide what option is best for you, it is important to understand the larger factors that you should consider:

  • Tax Implications 
  • Penalties
  • The power of tax-deferred compounding
  • Flexibility
  • Income needs 
  • Estate planning needs 
  • Liquidity concerns

In many cases, a rollover IRA is the best choice. Here are some of the potential advantages of doing a rollover:

  • Gain control - The rules and policies of former employer's plan may be restrictive and disadvantageous.
  • Improve Flexibility and Investment choices - Most employer plans offer limited investment options. By transferring an employer retirement plan to an IRA, your investment choices can be almost limitless. It is likely that you will be able to find retirement vehicles that provide more appropriate features and benefits. This will greatly improve your potential for diversification.
  • Gain access to professional investment advice and service.  
  • Improve beneficiary/estate planning.   
  • Penalty-free early distributions prior to age 59 1/2 for certain purposes. 
  • Can improve retirement income planning.
  • Potential for Roth conversion.
  • Can avoid potential problems that can occur with your retirement plan, should your employer have financial trouble.

By choosing the rollover IRA you get the same tax-deferred growth as you would with your company-sponsored retirement plan, you will not have to pay any taxes right away, and you will not be liable for any penalties. In addition, you will not be constrained by the often-limited choices offered through company-sponsored retirement plans.


Retirement Account Consolidation

In many cases, you might want to consider consolidating retirement savings accounts into one place to make investment decisions and retirement income planning easier. These accounts might include old IRAs, and other workplace savings plans, such as a 401(k), a 403(b), and a 457(b) government plan.

The benefits of consolidating your accounts and working with a qualified retirement advisor include:

  • Less paperwork
  • Easier monitoring and management of your investments
  • Improved and greater investment choices to address your needs
  • Asset allocation guidance and monitoring

Pre retirement Income Needs - Early Distributions

Generally, any withdrawals from a tax-qualified retirement plan prior to age 59 1/2 would incur an additional 10% tax. However, if someone is retiring early, loses their job, or needs emergency income, a 72(t) withdrawal from an IRA may be a viable source of income. 72(t)s enable individuals under 59 1/2 to withdraw money from retirement assets without a 10% penalty tax. Withdrawals must be made at least annually for 5 years or until age 59 1/2 whichever is later and must take place on the same schedule "substantial equal periodic payments". If you alter or stop your payments before this period ends, the 10% penalty tax applies retroactively with interest. The withdrawal amount is based on one of three standard IRS formulas. You should choose your calculation method carefully and should consult with a professional to help determine which is most appropriate for you. 


No matter where you live in Texas, call us today 1-800-683-8887.

Investment Tips:

  • If you ever have a question or concern regarding your account with a financial planner, brokerage firm, mutual fund company, or other institution, please contact them promptly.
  • Always review financial transactions for thoroughness and completeness. If you find an error, please report it immediately.
  • Annually review your investments to confirm you have complete records, documentation and contracts. 
  • Store your documentation in a safe place.

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