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When You Should Rollover Your 401k/TSP into a Self-Directed IRA

We suggested in a blog last month that there are five circumstances where leaving your employer sponsored retirement plan Donald S. Hannahswith your employer would be a better choice than taking a plan distribution.  This month we are sharing with you the many more reasons and circumstances that support rolling over your 401K into a self-directed IRA including:

  1. You are limited to fewer investment choices within your 401k.
  2. You have a large plan balance and the few investment choices within the 401k do not provide adequate diversification and risk reduction.
  3. Your employer sponsored retirement plan is missing important asset classes such as real estate, high yield bond funds, sufficient international choices including emerging market debt and equity funds, and sector funds.
  4. Mediocre fund performance within plan.
  5. Insufficient bond fund selections in 401k.  This is especially important as you near retirement.
  6. You have many accounts at previous employers and could lose track of them.
  7. You wish to simplify your Required Minimum Distribution calculations.
  8. You or your heirs will have to take money out of the employer’s plan, most likely at death, so why not simplify things now?
  9. Employer plans may not offer the “Stretch IRA” option for income tax deferral for beneficiaries. They may carry a 5-year rule instead.
  10. You want to reduce downside risk by using “Trailing Stop Loss Limit Orders”.

As stated in the previous article, “at PSG, we incorporate all of your assets into our Planning, Management, and Oversight. Moving your employee sponsored retirement plan to a Rollover IRA, is a piece of the larger picture with which we are concerned.“
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To contact Don for further discussion you may email him at: dhannahs@psgplanning.com.  Don is a Founding Partner of Planning Solutions Group, LLC.  Starting his practice in 1987, Don has focused primarily on closely held business owner planning.