Should I Move my 401(k) to an IRA?
With a 401(k), contributions are tied to your paycheck, typically deducted every two weeks. But with an IRA, you have the freedom to contribute whenever it works for you, as long as you stay within the IRS’s annual limits. For example, if you’ve got a little extra cash left over this month, you can add that. Got a holiday bonus? Toss it into your IRA. Maybe you sold something or received a gift—great, you can grow your retirement savings at your own pace.
There are a ton more great reasons to roll over into an IRA - let’s walk through some of them...
1. Simplicity
If you've switched jobs, there's a good chance you've forgotten about your old 401(k) accounts. The SECURE 2.0 Act of 2022 has set up a national lost-and-found database to help you track them down. But why wait for that? You can take control of your retirement savings right now by rolling over your old accounts into an IRA.
Here’s how it can benefit you:
- Simplified Management: It's easy to stay on top of your investments and keep moving toward your retirement goals when it’s in one place. Rolling over your old 401(k)s into an IRA also shields your savings from risks like company mergers, bankruptcies, or low-balance cash-outs during buyouts. With a PensionBee IRA, you can manage all your savings from one easy-to-use dashboard, available anytime, anywhere, on your phone or computer.
- Less Paperwork and Stress: You won’t have to juggle multiple account statements or stress over tracking different fees—everything is in one place, making it easy to manage your investments. With PensionBee, there are no hidden fees or confusing fine print. You’ll pay just one clear fee that covers everything from account management to customer support and even your investment portfolios. Closing your PensionBee account? A $50 administration fee applies.
- Streamlined Access: You can track your investments all in one place — no more dealing with multiple accounts or paperwork. Rolling over your 401(k)s into an IRA also simplifies estate planning for your loved ones. When the time comes, they’ll easily find your funds without the hassle of tracking down old accounts. After your funds have been transferred and invested with PensionBee, you’ll have full control to track your balance and performance, all with just a few clicks.
2. Unlock Your Investment Potential with an IRA
IRAs offer a wider range of investment options, letting you customize your portfolio to fit your goals and risk tolerance.
- More Investment Options: Unlike traditional 401(k)s, IRAs provide access to a wider range of investments. PensionBee’s IRAs are powered by model portfolios through State Street Global Advisors, one of the world’s largest asset managers, and offer a streamlined and cost-effective approach to investing, so you don’t need a degree in finance to get started. It’s an easy way to take control of your retirement savings without the complexity of managing investments on your own.
- Catch-Up Contributions: Rolling over to an IRA lets you take advantage of catch-up contributions if you're over 50, helping you boost your savings by contributing more to your account. Since you're in control, you don’t have to wait on your employer — your money can start growing right away, on your terms.
- Enhanced Diversification: By diversifying your investments across various asset classes, you can spread risk and potentially improve your long-term performance.
- Greater Flexibility: IRAs offer more flexibility in managing your retirement savings. You have the freedom to choose your investment strategy and adjust it as your needs and goals evolve. PensionBee provides 5 curated investment portfolios, including a climate-focused option, to align with your values and risk tolerance.
With an IRA, you have the freedom to create a plan that works for you and adapt it as your goals change. You can easily make adjustments along the way, giving you peace of mind that your retirement savings are always in line with what you want. Whether you're focused on balancing risk or investing in what matters most to you, this flexibility helps you feel more confident about your future.
3. IRAs Can Save You Money: Modern IRAs Often Come With Lower Fees
Are you paying high fees on your 401(k)? Modern IRAs can often have lower fees, which means more of your money stays invested.
- Lower Fees: Unlike 401(k)s, where employers often cover the fees while you're employed, those fees can be passed on to you once you leave your job. By saving on fees, more of your money can grow over time, strengthening your retirement plan. Every dollar saved from fees can be reinvested, helping you build a more secure future.
- Tax Advantages: Modern IRAs offer tax benefits like tax-deferred growth and potential tax deductions.
In the long run, rolling over to an IRA can help you save more for retirement by reducing fees and offering a wider range of investment options. The savings from lower fees can add up over time, giving you a stronger foundation for your future. With tax benefits and greater flexibility, an IRA is a smart way to build the retirement you’ve always dreamed of.
How Rollovers Work
Rolling over your multiple retirement accounts into a single IRA could be a great way to simplify your retirement planning. But what does it mean to roll over?
A rollover lets you transfer funds from one retirement account to another—tax-free and penalty-free, as long as you follow the rules. People often choose to roll over into an IRA after changing jobs, retiring, or just wanting to streamline their savings.
So, why consider an IRA? It can offer lower fees, more control over your investments, and the convenience of managing all your savings in one place.
