Some Good Reasons to Rollover a 401k to an IRA (individual Retirement Account)

What are some good reasons to rollover a 401k to an IRA? One of my clients asked that question recently. So, I furrowed my brow, then looked up at the ceiling and thought about it.

All retirement accounts have advantages. Some have disadvantages. In the best case scenario, a plan is sponsored by an employer that makes equivalent contributions, allowing you to grow your fund faster than you could alone. That’s what you have with a 401-K; the best case scenario.

But, since they are employer sponsored plans, one of the reasons to rollover a 401k to an IRA is a job change. But, your new job might also have an employer sponsored retirement plan. If so, the best solution might be to transfer the fund from one custodial company to the other. It’s possible that your new employer and your old employer even use the same custodial company, which would really simplify matters.

Generally speaking, custodial companies allow you to invest in mutual funds or stocks. Sometimes, government bonds are offered for those who want to “play it safe”. Companies like T Rowe Price, without actually offering advice, rank the mutual funds that they offer according to risk. Of course, all of the funds are linked to the stock market, so there is always some risk.

The IRS allows retirement funds to be invested in a variety of other vehicles, including real estate. But, most companies that manage 401-Ks do not allow investors to choose other options. So, one of the reasons to rollover a 401k to an IRA is to have the ability to diversify the fund, investing in less traditional, more profitable or less risky options.

In order to do that, you need a self-directed account. A custodian that allows truly self-directed investing will allow you to choose any option that is allowed under the tax code. You can choose tax liens, publicly traded stock, privately held stock, structured settlements and, as I mentioned above, real estate.

Guaranteed ROI in a real estate investment? Yes, we have a guaranteed ROI of at least double what you earned on your traditional investments, such as stocks, bonds and mutual funds etc. last year. Thats right, double what you earned on your investments last year. City Capitol does not guarantee how much money you will make, but they do guarantee that you will make at least double whatever your ROI was last year. I strongly urge you to check out this information for yourselves. This could be the path to financial freedom in your retirement.

Real estate is a good choice for diversification because your investment is secure. The account owns something real, something that has real value. Yes, that value might change, it could decline, but it is not affected by company profits or other economic factors that can affect the value of a stock.

My client was asking about the reasons to rollover a 401k to an IRA, because he was unhappy with the returns that he was getting on a yearly basis. He wondered if there wasn’t a way to earn more, faster.

Suppose you have $100,000 in your retirement account and it is currently earning 10% per year. That hasn’t happened recently, but just suppose, for the sake of argument, you were earning that much.

If you took that $100,000 and bought a house, resold it for a $10,000 profit, then repeated that three times in a year, you would be earning a 30% return on your investment. So, one of the best reasons to rollover a 401k to an IRA is to earn more and secure your retirement. Hope that answers the question. If you have a couple of minutes to spare, please feel free to browse through my website.

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