Why It matters:
- You may not have access to a 401(k) when leaving or changing a job, so you may want to consider an altrernative to help you continue daving for retirement.
- IRAs may offer additional investment options and tools to help you manage your savings.
- It may be easier to manage a single IRA than multiple 401(k) accounts.
Our workforce has become highly transient: Baby Boomers born between 1957 and 1964 held an average of 12.7 jobs from ages 18 to 56, according to a study by the Bureau of Labor Statistics.1 When you leave a job with a 401(k), it’s tempting to simply roll those retirement assets into the 401(k) plan at your next employer. But there’s also another option: rolling that money into an IRA.
Why consider rolling your 401(k) into an IRA?
You have more than one retirement account. Many people in today’s job market end up trailing a series of 401(k) plans behind them. Consolidating accounts allows you to manage your retirement assets in one place, which allows for easier recordkeeping and a more consistent approach to investing. Rather than constantly checking and rebalancing a wide range of investing options, having them all in a single IRA can make it easier to choose (or change) the investments you want.
You want more investment options. Many 401(k) plans have a limited selection of stock funds. They often have an even more limited number of bond funds, which can be critical as you near retirement and seek safer havens for your money. IRA investors typically have more leeway to choose where to put their assets. More adventurous investors can invest in exchange-traded funds, options, and real estate through an IRA.
Your 401(k) does not offer a retirement income program. Whereas 401(k) plans are limited to the options offered by the investment plan, IRAs are more flexible. Options with an IRA include annuities that can provide lifetime income that’s guaranteed, based on the claims-paying ability of the issuing insurance company. If that’s the kind of security you’re looking for in retirement, an IRA can make sense.
You don’t have access to another 401(k). Maybe your new job doesn’t offer it, or maybe you’re sitting out of the workforce for a while. Don’t fret: An IRA can usually fill the bill when it comes to keeping your retirement savings on track.
For more information on when IRA rollovers make sense, check out this handy guide from Transamerica’s Advanced Markets Group.
Leaving a job often gives you an opportunity to make these types of changes, which means it’s also a good time to reassess how well you’ve been progressing toward your retirement goals. Before you make any moves with your 401(k), call your financial professional to help determine the option that’s best for you.
Things to consider:
- Check with previous employers to see if you've left any 401(k) accounts behind.
- Talk to a financial professional to determine how to consolidate your retirement savings and decide if rolling them over to an IRA makes sense for your situation.
- If you decide to roll your retirement savings into an IRA, a financial professional can also help you figure out which ones offer the investment options and features that best meet your needs.
1 “Number of jobs, labor market experience, marital status, and health for those born 1957-64", Bureau of Labor Statistics, August 2023
Transamerica Resources, Inc. is an Aegon company and is affiliated with various companies which include, but are not limited to, insurance companies and broker dealers. Transamerica Resources, Inc. does not offer insurance products or securities. The information provided is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical or financial advice or guidance. Please consult your personal independent professionals for answers to your specific questions.
