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Another Reason to Roll your 401(k) to an IRA

The Pension Protection Act of 2006 was supposed to allow (read that as “require the employer”) a 401(k) beneficiary to roll the 401(k) account into an IRA as a beneficiary IRA. While this is still ‘permitted’ the rules do not mandate that the employer must allow this.
So, as part of your planning, and for sake of keeping your affairs in order. you should consider moving (rolling over) your 401(k) to an IRA upon a change in employers. There are certainly times where you might not want to do this. If you retire/quit from a company and are 55 or older, you have the opportunity to make withdrawals with no 10% penalty. At 54 or under, there are few reason now to make the move.


  • Dave Shafer October 17, 2008, 5:02 pm

    Yes, and roll it over into a brokerage IRA so you have more investment choices beyond the expensive mutual funds you have in your company 401K. Then learn how to be an active investor and leave mutual funds behind! Maybe even roll it into a self-directed so you can invest in real estate!

    Here is a suggestion: ask your financial advisor to create a chart with your favorite mutual funds and Berkshire Hathaway overlayed on each other for the past 10-15 or 20 years! Then ask him/her why they suggested mutual fund investments! And if they say diversification, ask them if the 60+ companies in Berkshire is diversified enough for them! 🙂

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