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Benefits Of Using 401K Providers Over Simple IRA

Make Your Money Work For You: Know The Benefits Of Moving From A Simple IRA To A 401K

Changing jobs often means changing where you keep your retirement funds. This is not news; retirement fund contributors the world over have experienced the 401K “rollover” where they stop contributing to their former employer’s 401K provider’s plan and deposit it to another account, such as a simple IRA.

However, many employees do not realize that once they begin working at their new place of employment they can actually move their simple IRA funds into their new organization’s 401K provider’s plan. Coined the “reverse rollover,” this allowable, but often overlooked, process can yield significant return on investment and can keep your retirement fund working for your future self.

Why You Should Consider A Reverse Rollover Into Your New 401K Provider’s Funds

Yes, the reverse rollover strategy may, at first, seem counterintuitive. Especially after you have already gone through the whole conventional rollover process. However, adequately saving for retirement takes decades, making it critical to continuously stay ahead of what will yield you the biggest bang for your buck. Working with the new 401K providers at your current place of employment can offer some distinctive advantages that may make it a wiser investment choice when compared to your simple IRA. Some of the benefits may include:

Improved Selection And Less Expensive Investment Options: Working for a large or even mid-sized organization that offers a 401K plan means that a lot of the investment legwork has already been done on your behalf. Plus group participation has its financial advantages. You will have access to a wider range of portfolio options that often cost less than their mutual funds counterparts. Many 401K providers will also provide a dedicated account consultant to offer suggestions and advice so you feel completely comfortable with your investment strategies.

Investment Consolidation: Having investments through various providers and saved in different accounts can prove inconvenient and even stressful for contributors. You can find yourself plagued with spending invaluable time keeping up with how your contributions are faring at any given point. However, keeping all of your retirement savings in one centralized location can make monitoring and managing your funds both straightforward and convenient.

Better Legal Protection: In some cases, your 401K contributions may offer better protection should you find yourself facing legal judgments.

Earlier Withdrawals: What is the biggest benefit of taking advantage of the reverse rollover? You will have the opportunity to access your investments without penalty at a younger age. Most IRA funds do not offer penalty-free withdrawals until investors turn 59 ½ years old. This can prove a major disadvantage and inconvenience for fund participants who opt for an early retirement. However, a 401K offers no-penalty distributions once the contributor reaches age 55 and has separated from the hosting employer.

Looking for 401K providers to help your retirement investment strategies? The Payroll Company can help you get a firm grasp on your current investment portfolio. Contact our team to discuss your specific savings needs.