Job Changes Bring New Retirement Plan Opportunities
The U.S. Department of Labor reports that baby boomers born between 1957 and 1964 held an average of 11 jobs from age 18 to age 44. That kind of job mobility has the potential to greatly complicate the task of managing your retirement assets.
Managing multiple retirement accounts from former employers can be burdensome. Costs associated with these retirement plans can add up, statements can be confusing and time spent managing each account can often be better spent elsewhere. Consolidating retirement accounts from former employers into one Individual Retirement Account (IRA) can possibly help you save you time and money — and perhaps your sanity.Plus, depending on the provider you choose, many IRAs could offer improved diversification, flexibility, guidance and service.
The below information from Thrivent Financial highlights four potential benefits in rolling tax-qualified retirement savings over to an IRA.
Make it easy on yourself to manage your retirement investments. Consolidating multiple tax-qualified workplace retirement accounts into a single IRA might make it easier for you to manage your retirement assets. Instead of piecing together multiple statements to find your overall investment performance and balance, just one statement does the trick. It can also simplify things for survivors in case of your death; ensuring survivors have the fewest complications when managing finances left behind.
Benefit from continued income tax deferral on your retirement accounts. In most situations, should you meet a distribution event under your old employer’s retirement plan (leaving that employer to take another job is a typical trigger event) you can transfer or rollover your investment assets under that plan to either another employer sponsored qualified plan or an IRA without triggering income taxes. Continuing tax deferral on your retirement investments means, allowing for market ups and downs, you can keep more dollars working longer for you.
Personalize your retirement savings program with increased investment options. Depending on the organization or company you choose, rolling over to an IRA may offer you more investment options than your previous employer retirement plan does. More options may help you better diversify your investments and can help meet retirement goals in accordance with your personal tolerance for investment risk, though it won’t eliminate the risk. Rolling over your old employer’s retirement plan to an IRA may be an option every time you leave a job allowing you to evaluate your progress toward meeting your retirement goals and, if necessary, make an required course corrections.
Simplify the calculation of your required minimum distributions (RMDs). Required minimum distributions (RMDs) — the minimum amounts that a retirement account owner must withdraw annually starting with the year that he or she reaches age 70½ or, if later, the year in which he or she retires—must be calculated based on all your tax-qualified retirement accounts. Consolidating retirement accounts by rolling them over into one IRA simplifies the calculation of a required minimum distribution.
A rollover into an IRA can be a helpful tool in retirement planning; however, there are other factors you should consider before rolling over old retirement plans, including investment performance and the fees and expenses charged by your old plan versus those charged by the IRA provider. A financial professional can help you evaluate whether rolling over old retirement plans into an IRA is a good move for you.
You can find more information at www.thrivent.com/IRA.
This article was prepared by Thrivent Financial for use by local area/city representative Merrillee Bradshaw. She has offices at 15117 Main St. Suite 206, Mill Creek, WA 98012 and can also be reached at 206.949.2204.
