Is my 401(k) still appropriate to hang on to, now that I’m retiring? Do I have to keep my retirement money in my 401(k) if I’m still working at my company? How about my 403(b) or 457 plans? How about cash balance pensions? These are just a few of the questions that I’m asked on a regular basis.
The short answer is, if you want more control and an actively managed account where you’re not stuck with mutual funds as your only choice, then you probably should consider moving your assets. The Fed was kind enough to give us a tax-free way to transfer our qualified retirement accounts like 401(k), 403(b), 457, and pension plans into our own IRA. Even if you are still working! If you are still working, you may be able to use the “In-Service Non-Hardship Withdrawal” clause in the tax code.
In-service withdrawals are made from qualified employer-sponsored retirement plans, such as 401(k) plans before participants experience a triggering event. These events generally include reaching age 59-1/2, being terminated from employment, becoming disabled, or death. Most employers will even allow you to keep the existing plan open and still contribute after you move the existing balance out, including employer matching continuation.
This move can open an entirely new world of opportunity for you. You may have your retirement assets actively managed in a variety of investments. We, here at American Retirement Advisors, specialize in retirement income planning. We understand that a portfolio of mutual funds, in or out of a retirement plan, may be too costly in fees, have a lack of client control, and have too much exposure to market risk. We seek to avoid these issues by building a well-balanced, fee-and risk-conscious portfolio, that adapts and changes over time with your renewed goals in mind.
Give us a call to schedule an appointment with your advisor, or come to one of our monthly Retirement Income Planning workshops. We are always here to help.