You have lots of options with 401k rollovers. Today’s employment world is complicated to say the least. This is not your father’s employment world. In days gone by, a person would take a low paying job while in high school or shortly after graduating to gain work experience. Some people went on to college, but many did not.
Regardless of education level, most people soon found a job with a major employer where they remained for many years (or decades). People stayed with one employer to earn a pension and some started their own second retirement account as a separate IRA. In the best circumstance, an employee earned both a pension and contributed to an employer matched 401k.
Today’s Millennial Retirement Reality
Those opportunities no longer exist for most of the younger Millennial generation. Today, there are several very different realities applying to Millennials saving for retirement. Fist, employee retirement is almost completely limited to 401k employer matching accounts. Gone are the days pensions rewarding you for loyalty to your company.
Importantly, once you stop earning a salary from that employer, the employer’s matching contribution also stops. That’s what makes the second job-hopping trend in Millennial employment so important when managing retirement accounts. Millennials tend to change jobs much more often. In fact, as far back as 2014, a CareerBuilder survey found that by age 35, a full 25% of employees had already transitioned through 5 or more different jobs.
Millennials job hop for many good reasons including matching lifestyle to employment, relocation opportunities, as well as career growth. However, these people are leaving unattended retirement accounts scattered among multiple employers. Some call these abandoned or orphaned 401k accounts.
However, it’s more likely they are simply unattended. Accounts that that mostly have the money invested in what made sense 2, 5, 7, or 10 years ago. Multiple accounts that each pay individual administrative fees when there is little or no administrative activity occurring. Dormant accounts that often have accumulated cash sitting in low interest paying money markets that came from dividends, mergers, or policy changes. The bottom line is these dormant retirement accounts are NOT being actively managed.
Retirement Simplicity
There is a simple process to consolidate multiple retirement accounts into a single much easier to manage Solo 401k rollover account. The Solo 401k account converts complexity into simplicity.
Beyond reducing administrative costs for multiple accounts, it gives you a much clearer view of your overall portfolio when it’s in a single account. Of course, your investing opportunities are much broader when you are in total control of your account. For instance, if you decide to purchase a rental house, you may need a relatively large amount of money. First of all, employer back 401ks don’t allow you to make truly diversified investments like rental houses. However, with a Solo 401k rollover account, not only are rental houses common, but the purchase is greatly simplified when all of your funds are in a single account.
And the simplicity continues well into your retirement years. Whether you are ready or not, at age 72 you must begin taking retirement distributions. This requires a lot of management on your part. That’s especially true if you have 15 or 20 accounts at the same number of previous employers. Plus, paying another new round of administrative fees to distribute each one of those accounts.
In today’s employment world, you’re essentially a self-employed individual working for a series of different clients. You’re definitely managing your career. Doesn’t it make sense to also treat your retirement account as if you are in charge?
Solo 401k Rollover
Here are most of the various types of retirement accounts available to be moved into and self managed as a Solo 401K rollover (or a Checkbook IRA):
- Employer 401k
- Traditional IRA
- Keogh
- SEP IRA
- SIMPLE IRA
- 403(b)
- 457 plan
- Profit Sharing Plans
- Qualified Annuities
Solo 401k Rollover Advantages and Benefits
The differences between a Solo 401k and an employer controlled 401k are profound. The Solo 401k retirement account isn’t available to everyone (the Checkbook IRA is available to everyone) but for those who qualify, it means gaining the ability to grow retirement wealth to levels that no other accounts offer.
You should consider a 401k rollover or Checkbook IRA if you want:
- Immediate access to your own assets with full decision-making authority.
- Clearly understand that you must diligently mange these funds to prevent them from being treated as distributions.
- You want to stop paying transaction and asset based fees to a financial advisor who severely limits your investment options.
- Have all profits from your investments build your retirement account tax-free.
- More diversification in your retirement account
- To invest in much more profitable options than Wall Street offerings
- Please contact us to discuss even more advantages and benefits you’ll realize with a Solo 401k or Checkbook IRA.
Recap
The Solo 401k is the most tax-advantageous plan available as well as having high annual contribution limits. The Solo 401k also enables you to borrow money from your retirement funds to help finance your business – something prohibited with IRA plans.
There are some legal limitations that prevent everyone from being eligible. The Solo 401k is limited to people who already own a business or who will be establishing a business that will not have full-time employees. This plan is perfect for independent contractors, home businesses, and real estate agents. The business owner’s spouse may also contribute to the plan.
Have questions about the Solo 401k? The experts at Nabers Group will help you get your retirement funds into your control, where they belong.
