Many people receive a 401k as a part of their benefits package from their employer. They see their financial statements several times a year and watch as their money increases incrementally. They may wonder whether this account will really provide enough money for them to retire in security and comfort.
No one wants to be a burden to their loved ones in their golden years. They want to ensure that they have enough money to be able to live comfortably for as long as they are able. There are several roadblocks in the way of this goal.
The first is the recent rise inflation. Although the American economy has always been subject to inflation, the rates this year are about four to eight times the amount that a consumer could typically expect. This is frightening mainly because it shows no signs of slowing, let alone stopping. By this time next year, your groceries could cost you twice as much as they do now!
The next thing that could cause an issue and prematurely drain your savings account is the rising cost of medical care. As we reach the approved age for retirement, many of us find that we need more medical intervention than ever before. Ambulance rides, hospital stays, and even routine care can easily run up bills totaling tens of thousands of dollars, and that’s even for those of us fortunate enough to have medical insurance.
Without insurance, these fees are even higher. That doesn’t take into account the cost of prescription medication which many need to routinely take in order to maintain their health and sanity.
Add all of these things together and it’s clear why many are deciding to take a look at their current retirement plan and trying to find a way to maximize its effectiveness. If you’re interested in moving the funds in your 401k, below you will find tips on how to do so.
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But First…What is it?
As already stated, a 401k is typically an account that is given to an employee through a benefits package. Because of this, many people are not aware of what it is or all it can do for them. A 401k account is a place to invest your money tax-free until you reach retirement age.
You can choose whatever age you wish, as long as it is after the required government date. While you only have to keep it into your account until you reach the age of fifty nine and one half, many choose to wait a few years longer. This is because the longer the money is in the account, the more interest it accrues.
As long as the money is handled properly, you never need pay taxes on it. That includes conducting a 401k rollover in the proper manner. Click here for more information about these accounts.
Rollover
A rollover is when you transfer your money out of one authorized retirement account into another. You could choose to transfer it into another 401k if you so desire. But there are several other options available to you that are worth the time it takes to conduct the necessary research.
One of these is a Roth IRA, another account that allows you to store your money tax free. Unlike a 401k, it is not tied to your employer but instead is accessed only by a single, private party. This can be a great option for those people looking to make a change in career.
Many people are choosing to work freelance in order to become their own bosses. If this sounds like your situation, than a Roth IRA might be the right option for you.
Another option that is growing in popularity is a Gold IRA. This is a specialized retirement account that deals exclusively in precious metals. An advisor is in charge of brokering deals on the client’s behalf, arranging for transportation of the stock, and then seeing that it is stored safely on-site with qualified security personnel on hand around the clock to maintain its safety.
These transactions can be done online or over the phone. Check out Bonds Online for more information about handling your rollover. There you can find a helpful review to aid in your decision making process.
What are the Rules?
The rules for committing to a rollover are fairly straightforward. The government allows you sixty days in order to complete your financial transaction. That means that you have almost two full months to withdraw your funds from your current account and then find a new place for it.
If you fail to re-invest your money into an approved account in that time period, you will be expected to pay taxes on the money. Depending on the size of your investment, that could be quite a substantial amount to owe to the government. You will want to be sure that you are able to complete the transaction in time.
Many investment firms will help to speed the process along. It need not take anywhere near two months, which can provide you with extra security and peace of mind. If you authorize a direct rollover, then your financial advisor is authorized to transfer money directly from your current account into a new one of your choosing.
This is available from any financial investment firm, including those that offer gold IRAs. Many people appreciate the convenience, and you may find that you do, as well.
You can also do an indirect rollover. It is equally as legal as the direct rollover method. In this case, you would withdraw the funds yourself before placing them with a new investment company. Some people prefer to exercise more control on their financial investments, so if that sounds like you, this may be the method you end up choosing.
Planning for your retirement need not be stressful. Take your time, do all the research you can, and then commit knowing that you’ve done everything possible to ensure that your financial legacy will live on even after you’re gone.