Considerations for Retirement Plan Rollovers

A fascinating case study in mountaineering is found in “Mountain of Ice,” a Jon Krakauer narrated Nova documentary of an ascent of Vinson Massif, Antarctica’s highest peak and the coldest mountain on earth, by a mostly world class climbing team. A team-wide disagreement broke out over whether to ascend the head wall via an easily navigable, but treacherous ice fall, or an adjacent, straight forward 50-degree slope. Half the team feared the inexperienced photographers would fall to their deaths on the steep slope, while the other half refused to risk their lives on the unpredictable ice fall. Lacking concession, a split-up resulted in half the team ascending each route, both successfully, after which a full reconciliation occurred. The decision to rollover a retirement plan to an eligible IRA or leave it in the company plan can be as complicated and as financially consequential as the Vinson Massif team’s headwall decision! Consider the advantages of each option as you chart your course to a successful long-term retirement:

Reasons to roll a retirement plan to an IRA may include:

• Flexibility to make changes and/or withdrawals more quickly by avoiding plan restrictions and delays.
• Quicker and smarter planning changes may result from a qualified fiduciary advisor being better educated on new Secure Act regulations than is your third-party plan administrator.
• Control of personal funds and easier integration of the account with one’s personal financial, tax, and estate planning.
• Easier adherence to Secure Act rules for beneficiaries inheriting retirement funds.
• Option to make Qualified Charitable Distributions (after age 701/2).
• Dramatic increase in investment options, including many new asset classes and investment types.
• Eradication of complicated retirement plan withdrawal restrictions.
• Consolidation of “like” retirement accounts offers simplicity and ease of control, including more flexible withholding options and aggregated RMD calculations.  
• Better service and more personalized attention from a fiduciary advisor who may be an expert in IRA tax law.¹

Reasons to leave assets in a company retirement plan may include:

• Better creditor protection than IRA’s for account owners residing in states which have minimal or no creditor protection.
• Uninsurable plan participants can purchase group life insurance without proving insurability and with retirement plan assets. Keep in mind complicated rules may apply at retirement.
• Required Minimum Distributions can be delayed by those still working, though only with an active retirement plan. Keep in mind portability rules allow an IRA to be rolled into an active retirement plan, providing the plan allows it.
• Retirees between age 55 and 591/2 (50 and 591/2 for public safety employees) can take withdrawals from a company retirement plan penalty-free, though taxes still apply.²

Guides with knowledge, experience, and integrity will seek the safest and surest path to the desired destination. These are essential characteristics, especially when multiple, complicated route options exist, as the two head guides on the Vinson Massif headwall ascent proved. Every climber said they chose the right guide and route! An experienced fiduciary advisor represents your interests alone and should prove to be an excellent choice of guides.

Think about it, Shaun.

“Where there is no guidance, the people fall, but in an abundance of counselors there is victory” ~Proverbs 11:14

1,2 Manual from Ed Slott & Company’s Exclusive Two-Day IRA Workshop, July 18-19, 2024

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the author.