LEXINGTON, Ky. (WKYT) – You’ve been saving and saving in your company’s 401(k) and taking advantage of that company match. It’s now finally your time to retire! But what should you do with that dormant 401(k) as you leave? Fiduciary financial planner Josh Smith of Strategic Wealth Designers joined the newscast to discuss what you should do with your account when your retirement rolls around.
“It sounds convenient to just leave it,” Smith says. “But the disadvantages often outweigh the convenience. You can no longer contribute to the plan and usually have less control if the money is in a 401(k). Most of the time, it makes sense to roll the money out of your 401(k) upon retirement.”
After retiring, you may want to consider moving the money from your dormant 401(k) into an IRA or Roth IRA. Direct rollovers from a 401(k) to IRA are penalty and tax-free transactions. If you roll the funds into an IRA, you will have to wait until age 59 ½ to begin withdrawing money to avoid the 10% early withdrawal penalty.
“You’ll want to take into consideration the fees on your account,” Smith says. “You might be paying unnecessary fees inside of your 401(k). Additionally, you want to consider the investment options. Especially when transitioning into retirement, you want to move your portfolio to more safe options.”
Taking the time to move the money from your dormant 401(k) can be beneficial to your retirement. To see additional stories surrounding business and economic news for the Lexington area, visit https://www.WKYT.com/Business/. If you have a question for Josh send an email to firstname.lastname@example.org.
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