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- Moving your 401(k) from your old job to an IRA through a rollover could be the right move if you're not sure when you'll go back to work.
- IRAs often have lower and more transparent fees than a 401(k), and a bigger variety of investment options can make them more personalized.
- You can always roll your IRA funds into a new employer's 401(k) in the future, or keep saving in your IRA.
If you've recently been laid off from a job with an employer-sponsored retirement account, it's time to consider making a change to your 401(k).
A 401(k) is a type of retirement account offered through an employer, and funded through withdrawals from your paycheck. After you've left your employer, you won't be able to keep funding that retirement account. To keep doing so, you'll need to move the money into another type of investment account.
For that, you might want to consider an IRA.
An IRA is the best option for anyone unsure when they'll return to work
An IRA is an individual retirement account that can allow you to keep saving for retirement, even without an employer. This type of investment account can be opened on your own through a brokerage firm of your choice.
2020欧洲杯足彩外围app"We have seen a relatively large uptick of people rolling over 401(k)s into their IRAs," says Bobby Glotfelty, a senior licensed financial professional with Series 7, 24, and 65 licenses at Betterment. "A lot of these cases are people who are no longer employed or are still looking for employment."
Leaving your old 401(k) at your old employer's provider won't do much to help your money grow. "By moving into an IRA, you generally have more investment options than you would with a 401(k). Often, 401(k)s restrict you on what you can invest in," Glotfelty says. With more investment options, like index funds and ETFs, you can invest more specifically to your goals.
2020欧洲杯足彩外围app"By switching to an IRA, a lot of times you'll find lower fees," Glotfelty says. "It's easier to figure out the fees you actually pay within an IRA."
Lastly, your IRA is a good tool to keep retirement money in one place, which can be especially helpful after you've had several jobs. Keeping all of your retirement money in one place can help you better assess where you are in relation to your goal, and how much more you need to save — plus, one retirement savings account is easier to keep track of than multiple.
You can keep your IRA when you start a new job, or switch to a new 401(k)
When you do go back to work, there are options for your new 401(k) as well. "You can always roll your IRA assets back into your new employer's 401(k)," Glotfelty says.
If you're able to keep saving in either type of retirement account, doing so will benefit you in the long run. Retirement accounts grow through compound interest, where money grows over time. Putting in money now with more time to grow will ultimately result in a higher account balance than putting in the same amount later.
2020欧洲杯足彩外围app"In almost all cases, rolling retirement funds over to an IRA makes sense," Glotfelty says.
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