Get a fresh start with a rollover IRA

If you’ re like a third of Americans, you have some money left in a former employer’s 401(k) plan. It’ s easy to see why. You have plenty of other things on your mind when you’ re leaving a job. Then, inertia sets in and the money stays where it is.

But for many people, it makes a lot of sense to roll over those funds into an IRA. With the help of your advisor, you can choose where the money goes instead of being limited to your 401(k) plan’s investment options. Also, consolidating multiple retirement accounts into one place can help you:

• Organize and keep track of your nest egg
• Choose the best distribution options available
• More easily manage your beneficiary information — and ensure it’s up to date

Plus, unlike some IRA contributions, rollovers have no income limits. And remember: Contributions and earnings in a traditional IRA account are tax-deferred, just like with a regular 401(k) account, so you won’t have to pay any upfront taxes when you complete the rollover.

Convinced? Here’s yet another opportunity to consider: Once you’ve rolled over your 401(k) into a traditional IRA, you could convert some of the funds to a Roth IRA. The drawback to this strategy is that you generally must pay taxes on the converted amount in the tax year of the conversion; however, a Roth IRA allows you to enjoy tax-free distributions in retirement once certain requirements are met. This would be especially beneficial if tax rates increase or you end up in a higher tax bracket after you retire.

Your advisor can offer additional insights on these opportunities and help you determine the right mix of traditional and Roth IRAs for your situation.