After years of working for an employer that offers a sponsored 401(k) plan, you’ve probably amassed a sizable amount in your retirement account. Once you leave that company, however, those funds remain in the account tied to that former employer – that is, until you decide what to do with them.
You have a few options for what to do with this 401(k), but the choice that gives you the most freedom to control your nest egg is rolling the funds over into a new retirement account designed for your future. If you have a 401(k) through a former employer that you haven’t made a move on yet, consider these rollover options and why they matter.
401(k) Rollover Options
Once you’ve made the decision to roll over a 401(k) from an existing employer, you have even more options on where to put your savings:
- New employer 401(k): If you transitioned from your former employer to a new company that offers a 401(k) plan, you can roll your existing 401(k) over to a new retirement account under the new employer. This is typically a good choice if the new employer’s plan offers more diverse investment options and lower fees.
- IRA: If your new employer doesn’t offer a retirement savings plan or the investment options aren’t as diverse as those offered by your former employer’s plan, you can roll your existing 401(k) into an IRA. IRAs offer a breadth of control that appeals to many investors.
- ROBS: If you dream of opening your own franchise or independent business, your existing 401(k) can serve a unique purpose you might not have known about – Rollovers as Business Startups (ROBS). Through ROBS, you can roll over an existing 401(k) account into a self-directed 401(k) and use your retirement funds as tax-deferred capital for your new business. By working with a third-party administrator like Tenet Financial Group, you can navigate the requirements and parameters of ROBS to legally build your business using the money your hard-earned money.
Benefits of 401(k) Rollovers
Regardless of where you move your 401(k), deciding to roll it over to begin with comes with a number of benefits – namely ease of control and flexibility.
Rolling over your former 401(k) gives you the opportunity to consolidate your retirement funds, rather than having multiple retirement accounts through different administrators. This makes it easier to keep track of your retirement savings. Additionally, with all your funds in one place, you’ll have greater control over how to invest them.
Also, some employer-sponsored 401(k) plans have restrictions on where you can invest and when or how you can withdraw funds. A 401(k) rollover may offer more flexibility in your investments. This flexibility is even greater if you’re choosing to use your retirement savings to fund your new business through ROBS.
You’ve worked hard for your retirement savings, so it’s time to use that money to help you build a brighter future. If you’re ready to begin a new chapter as a small business owner, Tenet Financial Group is here to help you find funding options that work for you. Call us today to learn more about how you can leverage a 401(k) from a former employer to grow your business.