Rollover - Size Doesn't Matter
An IRA is an Individual Retirement Account in which the owner designates the beneficiary. Generally, these dollars have never been taxed and can’t be accessed (without penalty) prior to the age of 59 ½. There are some exceptions, but they exceed the scope of this article. Distributions MUST begin to be taken at the age of 70 ½ and are taxable (in most cases again) at the federal level as ordinary income to the recipient. Many states do not levy a tax on withdrawals up to a specified amount. In New York, that limit is the first $20,000 in any calendar year after you have reached the age of 59 ½.
There can be multiple reasons why an individual might elect to leave their 401k at a former employer, and many of them are valid, but we have found that the number one reason former employers leave a 401k behind is LAZINESS. Let's face it, thinking about former employers generally evokes more grimaces than smiles, or else you'd still be working there! It is usually at some pivotal life moment that individuals transfer their 401ks to an IRA — retirement, turning age 59 ½ and a market downturn are three common stimuli.
The downside to most 401ks is that investment choices are limited to the scope of the plan. In fact, we know of one Fortune 100 whose 401k has only ONE fixed income choice. With Fagan Associates (we clear through Charles Schwab & Company) you have more mutual fund, stock and bond choices than you could imagine. We also assist in selecting the investments that are appropriate for your specific situation. The transfer process is relatively simple and we can assist you with the process.
As always our initial consultation is FREE - fRee - FReE (that was done purposely) and we welcome accounts of all sizes. Size doesn’t matter at Fagan Associates. In fact, some of our largest clients began with small relationships.
Please note that all data is for general information purposes only and not meant as specific recommendations. The opinions of the authors are not a recommendation to buy or sell the stock, bond market or any security contained therein. Securities contain risks and fluctuations in principal will occur. Please research any investment thoroughly prior to committing money or consult with your financial advisor. Please note that Fagan Associates, Inc. or related persons buy or sell for itself securities that it also recommends to clients. Consult with your financial advisor prior to making any changes to your portfolio. To contact Fagan Associates, Please call 518-279-1044.