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3 Reasons to Stop Delaying Your 401(k) Rollover

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In prior years, young people starting out in the post-degree work world didn’t have immediate access to a company-sponsored retirement account. Only people over 40, maybe even 50, were even thinking about retirement, let alone contributing to it.


Things are different today and, thankfully, retirement planning starts earlier for most people. But what happens to your 401(k) when you leave that first entry-level job and upgrade your career? No matter how big the nest egg, this money is still yours and shouldn’t be left behind. Here are 3 great reasons why:


Out of sight. Out of mind.
Let’s face it, we all procrastinate. If you procrastinate for too long, it can sometimes turn into forgetting. The last thing you want to forget about is your money. It’s important to also note that some companies don’t like holding on to low-balance 401(k) accounts for former employees and may just cut you a check instead. Then you’re responsible for getting the money to the new plan within 60 days to avoid incurring early withdrawal penalties.
 
According to research from Fidelity, approximately 44% of employees under 30 cash out their 401(k) when they leave a job. That’s higher than any other age group! Most experts agree that cashing out is a big mistake. There are often stiff penalties involved which, in essence, erase the benefits of starting to save early.

Contributions come to a halt.
If you leave behind a 401(k), it will continue to earn money from the actual investment. But you won’t be able to contribute more money to the balance if you’re no longer with the company. This means, unless the funds are performing extremely well, your 401(k) won’t be doing very much growing.


There may be hidden fees.
Sometimes there are hidden fees associated with keeping your old 401(k) where it is. Your old company may have covered these fees during the time you worked there, but, now that you’re no longer an employee, it’s likely those fees will be deducted from your account balance.

 

If you’re not happy with the mutual funds your new company has in its 401(k) plan, or they simply don’t offer one, you can roll your money into an IRA or Roth IRA. Mountain America Credit Union has experienced financial advisors who can help you get your money to the right place.* Additionally, for a limited time, Mountain America is offering a $100 Visa® gift card when you roll over a 401(k) to an IRA. Give us a call today—we’d love to help!




 
*As it pertains to dealing with a 401(k) from a previous employer, there are typically four options for the plan participant, each with their own set of advantages and disadvantages. The options are: (1) leave the money in the former employer’s plan, if permitted, (2) roll over the assets to a new employer’s plan, if one is available, (3) roll over to an IRA, and (4) cash out the account value.
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