So, I'm watching Anderson Cooper 360 and Suze Orman was a guest for a small segment. Anyway, she said I should do an IRA rollover with the entire 401k from my previous job. She didn't elaborate. Anyone here know what those advantages might be? I'm 52. Thanks.
Suze Orman is overrated...she always wants to solve people's problems (you know, why they got into debt in the first place). Based on that information alone it's hard to know for certain. IRA's are pretty safe and secure right, and they have the tax advantages. That might be why you want to throw your retirement egg into something safer right now as opposed to a mutual fund or index stock (although I can't seem them as being that bad of a risk right now either).
Do a little googling, ABM. You'll see that the answer is rather more complicated than Suze makes it out to be. There are some advantages, like being able to open an IRA with any institution (thus more investment choices) but also some disadvantages, such as not being able to take loans from the IRA. Here's a start: link barfo
If you intend to keep the money invested, there really isn't a whole lot of difference. The big bennifit is you can combine several 401K accounts (if you change jobs frequently) into one IRA account. Additionally, some companies start charging hefty administration fees if you leave your 401K in their pool for too long. As Barfo stated, there are some diferences if you are loaning money to yourself.
Thanks, barfo. I read that and it has some good stuff. I'm going to place a call to my 401k provider and get the skinny on how they'll provide for me going forth. I may just wait to roll this thing over to my new employer's plan.... Thanks again, ABM
Suze Orman is right. With a 401(k), you are limited to the funds that your former employer chose for you. With an IRA, you can put your money in any fund you like, or in stocks, bonds, or a money market account. It's completely up to you. That gives you more flexibility and freedom to control your own investing destiny. I did exactly what she recommends. I had money sitting around in three 401(k)s from former jobs, and last summer I finally put them all in a Vanguard IRA. It was a great decision. Vanguard has the lowest fees in the business, and in some cases there are no fees. Now all my investment money is in one place, and it's easier for me to stay on top of things. By the way, ABM, I'm 52, as well.
That's what I told you to do. I roll over my 401k into an IRA that I control and where I can take advantage of hundreds of more funds to balance my portfolio out. It's saved me a lot of money.
And, I responded that, for now, I was going to look-see what my new employer might provide. To which you agreed. I have time to weigh out the options. I'm just posing and evaluating different ways of thinking.
