Top 7 reasons to Roll an Old 401k or 403b into an IRA.If you know of anybody who has recently been laid off or has changed jobs, this would be extremely valuable to them.

If you have changed jobs, you might still have retirement accounts from your previous employers.  According to the Department of Labor, Americans move to a new employer once every four years and our collective trail of old 401k and 403b plans totals in the trillions of dollars.

While leaving your retirement account with your previous employer is a better decision then cashing it out to splurge on that little sports car you have always wanted, it is better to roll your old 401k or 403b plan into an individual retirement account (IRA) and here are the reasons why.

1.  Fees.  As with any investment there is some sort of cost of the investment itself.  However with employer-based plans those fees are often hidden so that you do not know how much in fees are actually being taken from your hard earned savings.  It is very difficult to track those fees, which are often higher than the fees if you held your funds in an IRA.

2.  Increased Options.  As you know, employer based plans are very limited in the investment options.  Often times you are limited to a dozen mutual funds or less out of the millions that are available out there. In an IRA you can invest in any mutual fund available, stocks, bonds, annuities, and even non-traditional options like real estate and venture capital. Nobody’s situation is the same and thus investment strategies vary tremendously so you should not be limited to a handful of options to try and accomplish your goals.

3.  Expert Advice.  How do you determine which mutual funds you invest in within your 401k?  Talk to your colleagues, follow a chart based on your age, or do what most people do and guess.  Shouldn’t the money you work hard to accumulate and that you will rely on to live in retirement be handled with more care than drawing straws?  Absolutely.  The choices you make with the asset allocations of your investments determine over 90% of your overall investment success.  An IRA can be managed by a financial advisor who knows your goals and objectives and can help make investment decisions based on all the important factors involved.  Although I will mention that if you are currently at an employer and rolling over funds is not an option, I do have the ability to assist you with your asset allocations within your plan as part of the financial planning services I offer.

4.  Greater Access.  If your former employer decided to change 401k providers, your plan assets will be temporarily unavailable to you due to a “blackout” period that occurs as funds are transferred from one plan provider to another.  That time frame can stretch from a few days to a few months.  You can always tap your IRA for retirement after 59 1/2 or before if it is used for a first time home or college expenses penalty free.

5.  Easy record keeping and organization.  Rather than having several accounts floating around, an IRA will help consolidate all of those accounts so that you have all of your investments in one place and can easily monitor them.

6.  Ability to convert to a ROTH IRA.  With the restrictions being suspended in 2010 allowing people to convert IRA’s into ROTH IRA’s and diversify the tax burden upon distribution, it makes the IRA more valuable than holding funds in a previous employers plan.

7.  Flexible Estate Planning.  IRA’s also offer more freedom as well as the potential for tax savings, in the estate-planning department.  If you want to name multiple beneficiaries or a charitable organization as your beneficiary it is best done with an IRA.  Most employer based plans do not accommodate sophisticated beneficiary designations.

If you would like to rollover funds from a previous employer plan, let me know and I can help set up an IRA for you.  If you know of anybody who has recently been laid off or has changed jobs, forward this email to them as it will be very helpful to them.  I can be reached at 651-647-4935 or at