Kerry Hannon at Yahoo Finance wrote about the growing number of retirees who hire a financial adviser for the first time as they leave work. EBRI data shows nearly half want help with saving and investing after leaving their workplace plan, and about a third want help with income and Social Security decisions.
The question I get most from new retirees is what to do with the 401(k). The reflex answer in the industry is roll it over. My answer is that it depends. I walk people through rolling it into an IRA, leaving it in place, or splitting the difference, based on the actual fund lineup, not a blanket rule. Some large employer plans have institutional share classes and stable value funds you cannot buy anywhere else, and leaving part of the balance there is the right call. Others have limited menus and high administrative fees, and consolidating into an IRA gives you more control and a cleaner beneficiary picture.
When a rollover is the answer, it should be a direct rollover, trustee to trustee, so no tax is withheld and no 60-day clock starts.
The underlying question retirees are really asking, whichever account they are holding, is the one Kerry captured: am I going to be OK? The rollover decision is one input into that answer, not the answer itself.
Read the full article at Yahoo Finance →
