Rolling a 401K Retirement Plan Into an IRA

By Debra Dragon

As more people are experiencing investment losses in their 401K plans, many are wondering if they would do better to roll that money into an IRA. Many financial experts believe that rolling a 401K plan into an IRA helps maximize your investment returns – especially during a period when you’ve been losing retirement investment due to the declining economy. If you are thinking about moving your 401K funds into an IRA, here are the four things you must consider to help you make the decision to change your retirement savings:

401K Plans are Controlled By Your Employer

What many people don’t realize is that 401K plans are controlled by your employer. They’re going to select retirement planning tools that will benefit the company – and probably benefit the company more than it benefits the individual retirement investor. Many people decide to move their 401K money into an IRA simply because they want to choose their own retirement planning tools and have more control in order to maximize their retirement investment returns.

IRAs Give Varied Investment Options

A 401K plan is limited to stocks and mutual funds which are chosen by the employer running the retirement investment plan. If you open a self directed IRA, you have more options as far as what you might invest your savings in. Self directed IRAs allow retirement investments in real estate, business partnerships or franchises, gas and oil fields, tax liens, and private equity among other retirement planning tools . If you’re not big on the idea of having to follow the market to make wise retirement investment decisions, the fixed rate IRA allows you to earn a guaranteed return on your retirement investment, without the risk of losing your retirement savings contributions.

More Opportunities to Maximize Your Return with IRAs

Many people move their 401K retirement savings funds into an IRA in order to invest in real estate. If you’re new to investing in real estate, it would be wise to find financial advisors or companies that specialize in retirement planning tools such as real estate investing to help you. Some companies will guarantee that you double your returns (or they’ll pay you the difference); which helps eliminate your risks. If you’re looking to study self directed IRA options yourself in order to make all your own retirement investment decisions, you might roll your 401K funds into a fixed rate IRA while you’re studying, to ensure you don’t lose any more money than you already have.

IRAs Put You in the Driver’s Seat

There are a few 401K retirement planning tools or plans that are labeled “self directed”, but they are not as flexible as a self directed IRA. Many employers offering a self directed 401K plan only allow a portion of all of your retirement investments to be self directed. Even self directed 401K plans allow the employer to change companies or retirement investment options whenever they want – and you don’t have any say in the matter. When you save for retirement in self directed IRAs, you can make decisions regarding your retirement investments at any time, with help from the account custodian you’ve selected.

Most people find they are able to maximize their retirement investment returns by rolling their standard 401K retirement planning tools into an IRA. Whether you roll your retirement investment fund into a self directed IRA that enables more variety of retirement investments, or a fixed rate IRA that guarantees you won’t lose your retirement savings contributions – IRAs offer more flexibility and control over your retirement fund.