Thinking Outside the Street Episode 3 – Caring for Orphan 401(k)’s

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In This Episode:  Paul and Cliff discuss reasons why you might want to rollover your orphaned 401(k) to an IRA

Advantages

  • More investment options.
  • Access to professional management of the IRA account.
  • The opportunity to invest with fewer mandatory holding period restrictions on your account.

Downside

  • Can’t borrow against an IRA but you can borrow against a 401(k) (if your plan allows it).
  • Access to 401(k) funds without penalty can be as early as age 55, but IRA you need to wait till 59 and 1/2.

Be Careful

  • Do a direct rollover and do not take constructive receipt of the funds.
  • Get a plan in place to wisely manage your IRA or hire a money manager to do it for you.