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Your IRA, On a Roll

What's on the To-Do List for a Job Change?

There’s so much to consider when changing jobs, including the potential impact on one’s retirement assets. A job transition provides the opportunity to not only evaluate, but perhaps gain control over company-sponsored retirement plans.

Why choose a rollover? Employers typically select and periodically change outside companies to manage their employee retirement funds, and although employers are required to act in the best interest of the plan participants as the retirement plan’s fiduciaries, there is no guarantee that every decision an employer makes will fit the individual needs of all plan participants. Taking control of one’s retirement assets during a job change (or at retirement) offers newfound freedom. At that point the individual may evaluate options, including keeping the funds in the existing plan, transferring them to a new plan, or rolling over retirement plan assets to an Individual Retirement Account (IRA) where the individual can select a financial service professional and perhaps update strategies to help ensure overall financial wellbeing. Another reason for rollover is that an employer-sponsored retirement plan does not allow money to be added once the employment is ended.

Likewise, the flexibility of being able to choose from different IRA funding vehicles has its rewards. As an IRA owner you can choose to invest funds in different financial products, such as mutual funds, stocks, Cds, annuities, and the list goes on. Many employer-sponsored retirement plans limit the investment options, and how money is distributed. An IRA rollover gives an individual control over the timing, frequency, dollar amount based on applicable guidelines, and how the money is invested and managed, based on personal needs.

What’s the process? Rolling over a retirement plan’s assets may intimidate someone who doesn’t know what to ask, how to ask, or whom to ask for help. The tax implications, paperwork, and selection of investment options can be equally daunting. However, with the right resources, solid understanding, and professional financial guidance, the process can be simplified and the transition can be smooth. Moving the money can be as simple as a phone call or it can involve paperwork. Though rollovers and transfers are typically nontaxable events, tax implications should be verified with your tax or legal advisor, especially if transferring stocks out of a plan. It’s also crucial to request that checks are made payable in the proper format. An IRA rollover should always be payable to the appropriate IRA trustee using a for the benefit of (FOB) designation. Rollovers can be accomplished within seven to sixty days, and therefore frequent follow-up is paramount.

The next time a job change is in the works, or perhaps when the next quarterly statement arrives, remember this: Doing nothing is a decision in itself. Instead, take control and maximize the potential of your retirement outcome, whether you’re moving on to a new job or not.

Angie Z. Shay has worked in the financial services industry for more than 22 years. She is president of THE PATH Financial Strategies, LLC. Angie Shay is a financial adviser with Eagle Strategies LLC, a Registered Investment Adviser and an indirect wholly owned subsidiary of New York Life Insurance Company. THE PATH Financial Strategies, LLC is not owned or operated by Eagle Strategies or its affiliates. Neither THE PATH Financial Strategies, LLC or Angie Z. Shay provide tax or legal advice.
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