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Be Wise With Money

Untangle Your Savings With an IRA Rollover

Trying to manage many retirement accounts

Managing multiple 401(k)s and other employer-sponsored retirement accounts can be like trying to walk five dogs at once. You have to keep track of every one. The good news: An individual retirement account (IRA) rollover can make matters much simpler – and potentially provide you with some tangible benefits in the process.

Think of an IRA rollover as a leash detangler for your accounts. If you're trying to juggle multiple 401(k)s from previous employers, it's easy to miss a critical piece of information, such as a statement or a plan change. And you could be racking up multiple fees from all those different plans.

Keeping tabs on them all is enough to confuse or even exhaust anyone – dog-walkers and investors alike. That's where rolling over to an individual retirement account could help.

What is an IRA rollover?

In simple terms, an IRA rollover consolidates multiple qualified, employer-sponsored retirement accounts – 401(k)s, 403(b)s or 457s, for example – into a single IRA.

An IRA provides you with more investment choices. It gives you more control over your money and may even offer you additional distribution options than your 401(k), particularly around estate planning needs.

IRA benefits & disadvantages

annual IRA contribution

Moving to an IRA has its perks – and potential drawbacks.

Some benefits to consider:

  • IRAs generally offer more investment options than other retirement plan options.
  • New contributions can reduce your taxable income by the amount you contribute.
  • Funds you withdraw after age 59 ½ are not subject to early withdrawal penalties.

Now for the disadvantages:

  • You can't take loans from IRAs like you can from some employer-sponsored retirement accounts.
  • Withdrawals prior to age 59 ½ mean you'll face a 10% early withdrawal fee in addition to taxes.
  • Fees or service charges could be higher or lower than what you pay in a 401(k).
Be sure to check with your tax advisor to learn how rolling to an IRA may affect your situation.

Are you ready to roll?

If an IRA rollover is right for you, the next step is to decide how to allocate your money. Compared to the typical 401(k), an IRA can offer more investment options – stocks, bonds, mutual funds, annuities and more.

Those options can provide you with more control over your investments.

But they also create more decisions for you. And that's where a skilled financial professional can help. He or she can work with you to determine your risk tolerance and assess the investment options that may be best for you.

Get the guidance you need

It's important to feel comfortable with your retirement account decisions, and your financial representative can help you find the option that's right for you.

If you'd like to explore more about IRA rollovers, or have questions about the difference between an IRA and a 401(k) or other employer-sponsored retirement account, contact a Thrivent financial representative in your area – they're here to help.

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