written by Kelly Campbell, CFP, ChFC, CMFC |  

So Boomer , you just found a new job or better yet retired and you are wondering if you should do something with your old employer’s 401(k) Plan. You are not alone. I get this question often so here is the answer.

There are many situations which you may encounter when you should transfer your 401(K) retirement plan to an IRA ( Individual Retirement Account .) They include:

• Changing positions
• Plan termination
• Plan Change
• Company buyout
• Switch to Part time
• Death of a participant

And others may apply as well. But there are a few very important reasons why you would want to take it out of the company’s control and place it more into your control by rolling to a Self Directed IRA. Here are three of the most important.

1. The typical 401(K) has approximately 8-12 investment options with which to choose. By moving from a company 401(K) to an IRA in a brokerage account you will have many more options including: any stock or bond listed on a stock exchange, over 15,000 mutual funds, closed end funds, unit investment trusts as well as exchange traded funds. Simply put, you could build a more diverse portfolio and diversity can help offset risk and build return.
2. Within a self directed IRA, you have more distribution choices especially as you get older. These choices revolve around how your beneficiaries will receive the funds if something happens to you, how you can take distributions as well as what kind of access you have to your assets. More options can provide you with greater flexibility in your planning.
3. Many 401(K) plans have limited beneficiary options upon the death of the participant. The main issue here is the availability for a non spouse beneficiary (i.e. one of your children) to be able to roll the 401(K) assets into an IRA for their benefit rather than having them immediately take the money and pay the tax. Most 401(K)s do not allow anyone other than a spouse to roll the money ...