What Accounts Can I Roll My 401k Into?

Many individuals must decide what to do with their 401(k) accounts when changing jobs, with rolling them over into an IRA being the most popular solution to ensure tax advantages are preserved as well as access to various investment options.

Alternative solutions could include rolling them over into either a traditional or Roth IRA to defer taxes until retirement; with the latter providing additional advantages.

Betterment

Betterment is an online investment and savings company offering robo-advising, retirement planning, cash management, checking accounts, low fees and automated rebalancing to assist retirees in optimizing their savings. They also provide a satisfaction guarantee as well as free basic plans.

Betterment makes it easy to roll over your 401(k) into an IRA by filling out an online form and answering a few questions. They also facilitate transfers of other retirement accounts such as pensions, 401(a), 457(b), profit sharing plans, stock plans and Thrift Savings Plans.

Betterment’s Core Portfolio is well-diversified and cost-efficient, with its algorithm regularly rebalancing it to maintain optimal returns. Unfortunately, however, Betterment lacks the flexibility of an automated trading account or custodial account for children. Their mobile app gives access to your investment, savings, and checking accounts when away from home and deposits into Betterment can usually be invested within one or two business days of deposit.

Wealthfront

Wealthfront is one of the first robo-advisors and offers many attractive features. Their investment philosophy draws heavily upon Burton Malkiel, author of “A Random Walk Down Wall Street”. Wealthfront also provides free financial planning tool Path, which utilizes academic research to determine your likelihood of meeting goals while comparing cost effectiveness across various saving strategies.

Automated investment portfolios managed by Charles Schwab are tailored to your risk tolerance and utilize daily threshold rebalancing as a feature to keep portfolios from deviating too far from their desired asset allocations.

Wealthfront boasts several advantages over competing platforms: low management fees, a low minimum balance requirement and attractive yields on its cash account. Furthermore, they boast one of the strongest retirement offerings with Roth IRA and 529 college savings accounts available to clients. Unfortunately, however, they do not provide DIY investing or fractional shares options, nor tax loss harvesting or human advisor services – thus leaving many users to turn elsewhere for help when considering investing.

Vanguard

Vanguard is an industry-leading investment company with a variety of services for investors. This includes index mutual funds and exchange-traded funds (ETFs), which are professionally managed collections of stocks or bonds that trade like shares on an exchange. Vanguard also boasts lower fees than its competitors.

Your money can easily transition into a Vanguard account using direct rollover, without incurring any tax-deferred benefits being forfeited in the process. Make sure any scheduled employer contributions have been discontinued prior to transfer as any leftover funds may be taxed when withdrawn from their 401ks.

Vanguard provides 13 balanced retirement portfolios when you convert your 401k to an IRA, using funds from different asset classes – including social impact investments – as part of its offering. In addition, there is also an extensive library of educational materials on investing, retirement and financial planning provided.

Edward Jones

Edward Jones is a brokerage firm offering an array of investment products. Their financial advisors collaborate with their clients to craft wealth management plans and make investment decisions on their behalf, in addition to offering retirement planning, college savings and insurance services. Established in 1922 and based out of St Louis Missouri since then, Edward Jones currently boasts more than 19,000 financial advisors who oversee over 7 million client assets under their care.

Edward Jones could be an ideal way to transfer your IRA. Their Guided Solutions program allows investors to invest in eligible mutual funds and exchange-traded funds (ETFs). Plus, flexible options exist for clients with lower initial investment amounts.

If you decide to roll over your 401(k) into an IRA at Edward Jones, take care to review its fees carefully. In particular, pay attention to expense ratios for their funds as well as any hidden or additional charges you might encounter.


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