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401k Rollover Advice

Updated on August 10, 2009

401k Rollover Advice - Diversify your Business Portfolio

The best 401k rollover advice that you should carry out is to convert your 401k retirement plan into Individual Retirement Account or IRA. In some instances, your custodial company can offer you with both types of retirement savings account, so there is no need for you to change companies. Since you will have your 401k rollover to IRA, it’s also the best time for you to take a good look at the performance of your investments.

Generally, a 401k account is a great vehicle to adequately save for your retirement years, but if your assets are tied to money market funds and common stocks, you may be quite disappointed with your investments’ returns over the previous years. Because the economy is experiencing recession and financial difficulty, the earnings of your 401k account is greatly affected by the markets’ performance. Investment experts highly recommend portfolio diversification, but when all of your assets are coupled with the stock market and the unpredictable value of the US dollar, how can you diversify your business?

401k Rollover to an IRA

To fully diversify your business portfolio, you should perform a 401k rollover to an IRA, which will permit you to invest in real assets and properties. A 401k rollover advice that you should always keep in mind, is to look for a custodian that will not limit your options. Custodians who present restricted investment choices to their clients also limit their supposed earnings. If you are investing for retirement and choose to go for a self-directed retirement plan you can put your funds in raw land, houses, apartment buildings, office buildings, mobile home and even in other segments of the real estate market. Your retirement plan can also be utilized to make loans to people who want to purchase a home or write mortgages for property holders.

So how can you accomplish a 401k rollover to a Self Directed Individual Retirement Account (IRA)? The first step that you should take is to contact your custodian. There can be two options available; first, you can go for a true rollover, which calls for liquidation of all your assets within your retirement account, wherein a check can be written to you. The second option becomes available when you found a new custodial company, wherein you can tell your custodian to carry out a direct 401k rollover to a self directed IRA. Find out what is a self directed IRA for more information.

More 401k Rollover Advice

A direct rollover is in point of fact a transfer because all the contributed funds and other investments are transmitted directly from one financial body to another. But, you should remember that not all of your assets are transferable, although many of the common stocks are. You may be able to use a 401k loan instead.

Another 401k rollover advice that you should not fail to perform is to strictly follow all the Internal Revenue Service’s rules and regulations with regard to the 401k plan rollover to an IRA. You are only allowed to make a rollover once in a 12-month period and you have sixty days to redeposit your funds to your new custodial company. It’s important to note though, that these rulings do not apply if your contributed funds are moved directly from one financial institution to another. With sufficient understanding, your 401k account rollover to an IRA will grant you a well-off retirement.


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