When owning a business, there are always important choices to consider in order to plan your future. You spend all your working years saving for retirement, and probably have most of your savings in your company 401(k) plan or other retirement account. When you leave your business, you will need to decide what to do with the money in your retirement account. One possible option may be an IRA rollover.
A direct IRA rollover could be a smart choice for a number of reasons. If you were to take a direct withdrawal from your retirement account, you would be subject to a mandatory 20% withholding for income taxes (regardless of your tax situation). If you chose to reinvest the original amount in another retirement account or IRA, you would have only 60 days to do so. This can be prevented by choosing a direct rollover strategy. Just open an IRA at a bank or another financial establishment, and direct your former personnel department to send a check directly to the financial establishment.
An IRA transfer allows you to continue tax deferral on your retirement savings. In delaying your taxes like this, you can have significantly more in your plan when it comes time to take withdrawals. The amount that would have been withdrawn to pay taxes is still there to grow and gain interest. By the time you start making distributions from the plans, you could potentially be in a lower tax category. This could represent even additional tax credits.
One of the biggest advantages that an IRA offers compared to a 401(k) plan is the amount of investment options. 401(k) plans are usually limited to approximately a dozen investment choices. Many asset classes are not even characterized and the performance of the plans may be less than optimal. On the other hand, IRAs can provide many different investment options. They let you diversify your assets in shares of stocks, bonds, mutual funds, REITs, and other types of investments. Your financial team can help you select the most suitable options according to your objectives, current financial situation, and risk ability.
Another benefit of an IRA rollover is that it allows you to later your assets to a Roth IRA. With this strategy, you would only be charged taxes on the amount transferred. Any gains thereafter are tax-free if certain stipulations are met. Additionally, if you keep your Roth IRA for five years you may be allowed tax-free withdrawals. In the event of death, disability or first-home purchases, you could be spared the early withdrawal fee. Of course, your initial (Roth IRA) transfer amount can always be distributed without paying taxes.
There are other options besides transferring your retirement savings to an IRA. You may simply just decide to leave your money in the original account. Another choice could be to take a cash-withdrawal from your account. Lastly, if you were to choose to buy a business and that firm had a retirement plan (i.e. 401(k) plan), you could shift the account to the new business' retirement plan.
Therefore, meet with your professional team and get their input on the best way to shift your retirement savings. It can have a big impact on securing your retirement. By taking time to strategize, you can help ensure a secure, stress-free retirement.
A direct IRA rollover could be a smart choice for a number of reasons. If you were to take a direct withdrawal from your retirement account, you would be subject to a mandatory 20% withholding for income taxes (regardless of your tax situation). If you chose to reinvest the original amount in another retirement account or IRA, you would have only 60 days to do so. This can be prevented by choosing a direct rollover strategy. Just open an IRA at a bank or another financial establishment, and direct your former personnel department to send a check directly to the financial establishment.
An IRA transfer allows you to continue tax deferral on your retirement savings. In delaying your taxes like this, you can have significantly more in your plan when it comes time to take withdrawals. The amount that would have been withdrawn to pay taxes is still there to grow and gain interest. By the time you start making distributions from the plans, you could potentially be in a lower tax category. This could represent even additional tax credits.
One of the biggest advantages that an IRA offers compared to a 401(k) plan is the amount of investment options. 401(k) plans are usually limited to approximately a dozen investment choices. Many asset classes are not even characterized and the performance of the plans may be less than optimal. On the other hand, IRAs can provide many different investment options. They let you diversify your assets in shares of stocks, bonds, mutual funds, REITs, and other types of investments. Your financial team can help you select the most suitable options according to your objectives, current financial situation, and risk ability.
Another benefit of an IRA rollover is that it allows you to later your assets to a Roth IRA. With this strategy, you would only be charged taxes on the amount transferred. Any gains thereafter are tax-free if certain stipulations are met. Additionally, if you keep your Roth IRA for five years you may be allowed tax-free withdrawals. In the event of death, disability or first-home purchases, you could be spared the early withdrawal fee. Of course, your initial (Roth IRA) transfer amount can always be distributed without paying taxes.
There are other options besides transferring your retirement savings to an IRA. You may simply just decide to leave your money in the original account. Another choice could be to take a cash-withdrawal from your account. Lastly, if you were to choose to buy a business and that firm had a retirement plan (i.e. 401(k) plan), you could shift the account to the new business' retirement plan.
Therefore, meet with your professional team and get their input on the best way to shift your retirement savings. It can have a big impact on securing your retirement. By taking time to strategize, you can help ensure a secure, stress-free retirement.
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