#110 1/2 - ONE MORE pro of rolling over employer plans (like a 401(k)) to an IRA
Update: 2024-08-05
Description
I'm a buffoon and I missed including another important pro of doing an employer plan-to-IRA rollover in episode #110's list of pros and cons of rollovers. The additional potential pro is the ability to do Qualified Charitable Distributions ("QCDs") out of the IRA if you're at least 70 1/2 and charitably inclined.
So, the recap the full list of pros (including QCDs) and cons of doing an employer plan-to-IRA rollover:
Potential PROS of rolling over an employer plan to an IRA or Roth IRA:
- More investment options
- Likely lower fees and costs
- Access to professional advice
- Better control over tax withholdings
- More withdrawal options
- Less Required Minimum Distributions ("RMDs") to manage
- Less financial clutter
- Gain the ability to do Qualified Charitable Distributions ("QCD")
Potential CONS of rolling over an employer plan to an IRA or Roth IRA:
- May lose the ability to take early distributions without penalty
- May lose the ability to cleanly do backdoor Roth IRA contributions
- May lose the ability to continue to delay RMDs from that plan (if you're still working at that employer)
- Lose the ability to take loans from the money
- May lose the ability to take advantage of Net Unrealized Appreciation ("NUA") of company stock
- May lose access to a stable value or managed income portfolio investment option
- Potentially less creditor protection
Links in this episode:
- Tenon Financial monthly e-newsletter - Retirement Planning Insights
- Facebook group - Retirement Planning Education (formerly Taxes in Retirement)
- YouTube channel - Retirement Planning Education (formerly Retirement Planning Demystified)
- Retirement Planning Education website - www.RetirementPlanningEducation.com
To send Andy questions to be addressed on future Q&A episodes, email andy@andypanko.com
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