Rollover Your 401k Into an IRA? Not Necessarily

By Lou Chong

     

    

Why all the fuss over 401ks and rollovers?
Due to the decline of traditional pension plans, 401ks now typically represent the bulk of retirement assets for most investors. So, making good decisions on what to do with those assets is very important.

Is rolling over your 401k account into an IRA a bad thing then?
It depends. In many cases it does make sense to rollover your 401k account. What doesn't make sense is to do anything without understanding what options you have, what costs are associated with those options and most importantly-having a financial plan which guides you in understanding what role that pot of money plays in your financial future.

Reasons to keep your 401k account with your employer

• You are happy with the current investment options in the plan.The plan has a diverse menu of good performing and reasonably priced funds.
• If you are 55 years or older, maintaining your 401k account gives you an option to take distributions without incurring the 10% penalty, as you would (with certain hardship exceptions) in an IRA.
• I'm not a big fan of this. But you could also take out a loan against your 401k balance for short term needs.
• Your 401k account is protected under ERISA, so there is general protection against creditors. IRA's are not necessarily shielded from creditor protection, depending on your state of residency.
• You minimize the potential tax impact of the pro rata rule if you plan on doing a Roth IRA conversion using non-deductible IRA assets.

Reasons to rollover your 401k account into an IRA

• You are dissatisfied with your employers plan's investment options.
• You find that you can significantly reduce overall expenses by rolling into an IRA.
• Your employer makes changes to the 401k plan which restricts how you are able to invest.
• You have too much employer stock in your account.
• You want to consolidate and simplify having to track the myriad other qualified retirement accounts you currently own.

The best decisions come from good information.

The best decision on whether to make an IRA rollover comes from having a thorough understanding of your financial situation and objectives, and then obtaining information on what those alternatives will cost you in terms of investment related expenses and potential tax impact. A competent financial planner can help you make those decisions by taking into account your total financial picture and long term goals.

This article is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained in this article constitutes tax, legal, insurance or investment advice. This article should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein.
 

Lou Chong, CFP, CRPC has over 20 years of professional experience in the investment management and retirement plans industry. He is also the founding principal of Wedgewood Wealth Counsel LLC, a firm dedicated to delivering comprehensive financial planning and wealth management strategies with a fiduciary standard of care.
 

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Investing in Precious Metals - Beware of the Pitfalls

By NI Jocson

     

    

It is easy to invest in precious metals.

But what you should be mindful of, first and foremost, is to opt for physical consignment of gold. Whether you store it in your personal vault or have it stored in a segregated depository, it does not matter as long as your priority in investing in precious metals is physically owning them (the metals).

If, however, you have a solid investing background, you may go with other investment vehicles. But for the sake of saving you a lot of troubles and most specially the money you worked hard for, go for physical delivery of your metals. That should be your strong position when it comes to precious metal investing.

Beware of the Pitfalls

• ETFs or exchange-traded funds - are traded just as you do with stocks. An ETF maybe a very good medium if you are into trading but may work against you big time if you chose to use it in investing. If you'll be purchasing an ETF remember that there is no gold or silver in it - just as mentioned, you have to get physical when it comes to precious metals.


• Pools and Certificates give you a "promise" of gold or silver and many are lured to buy them because they appear to be cheaper. These do not charge you fees for storing metals because simply no metals are actually stored. And they are funding their investments collected from the buyers.


• Using leverage such as options, margins, and futures - is too risky for an investor who does not know how to use it. And you are actually giving someone your money and invest it for you. You have to get educated if these vehicles are what you want to use.


• Numismatics. Still, you have to do your own verification, buying numismatics is for collectors (most of the time). If it is your hobby to collect these types of coins then go. But getting into it as an investment may not work well for you. You will be limited to buyers of rare coins who are only a few of them out there.


• Fraudsters, scammers and con artists. Beware of customer service pushing you to buy rare coins. If they are so pushy about it, make sure you do not end up buying the coins. Commemorative coin scams - if you watch an ad about such a coin, beware of it, must be a scam. If you remember the Freedom Tower Silver Dollar (claimed to be retrieved from Ground Zero debris),the con artist refunded more than $2 million to those who purchased the fake coin. Beware of scammers online selling slabbed coins. These people can buy slabs and slide coins already counterfeited. Numismatic coins are easily counterfeited than bullion coins.

Harness your power of spotting the pitfalls! Do not fall into these schemes! Find here the best gold and silver investment company.

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