Transcript:
Katie Nealis:
Why should I consider a 401k rollover to an IRA.
Easan Arualanantham:
So, there’s a few good reasons. But I think the biggest reason is, when you’re in a 401k, you’re cut a lot to whatever your plan gives you as investment options. When you roll over to an IRA, you’re have basically, your he opens the book, you have so many ETFs that you can reach out to and pick. And there’s a lot of other kind of like smaller things like you can do with, you can’t do a Roth roll or conversions with 401 K’s, they have to be IRAs first. And also, when you leave a company, sometimes game back to HR to deal with your 401k. And all that kind of stuff. All that bureaucracy is kind of a pain. And when you come when you roll over to an investment company, or to Vanguard or any company, they have a lot better client service than your HR, because HR does so much more than just for one case.
Tom Vaughan:
Yeah, it’s it’s a, it’s an area of interest right now in the regulatory arena, the SEC and FINRA both working on different concepts on how to make sure that people advisors like us do a good job advising people on rolling over 401k. And unfortunately, an advisor has a vested interest in having you roll that over into an IRA, because of the fact that you know, we don’t make money, oftentimes, when it’s sitting in the 401k. We make money when it’s sitting in the IRA. And so, you know, there is some aspect to that you have to think about, which is just, you know, what is the cost to stay in my 401k? Sometimes that’s hard to tell. And that is where you’re going to have to contact your HR department to really figure that out. And then what is the cost for wherever I’m going to move in total, all right. And so you’ve got all these benefits to move, in my opinion, like Easan said, right, you can, you have way more flexibility, you can buy anything. And also, you have this ability to roll it into a Roth IRA, which I think is something that you must look at what you might not be able to do it. But it’s something that is a big, big component of, of what you would look at here, but you do have to consider all of the costs, make sure that it’s going to work for you as far as that goes.
But I have an awful lot of clients. So basically, they just don’t want to deal with the old company. And they’ve left that company, you know, either they retired from it, or they left it and went to a different company, you know, having their money sit in this 401k at a company they’re no longer at is, is just they just rather continue to roll them out as they move from job to job into their IRA. So there’s actually a lot of different arguments on every side, the biggest problem that we’re having in our business is that there’s just a lot of people that do things wrong. It’s like any other business. And so the regulatory agencies are coming around trying to make sure that you’re not you know, getting hit with this, you know, equity indexed annuity with a 20 year penalty that you just rolled your 401k out that had no penalty. You know, all of these crazy things that we keep seeing happening, and that’s why these regulations are coming out, but I applaud them. I think, you know, there just needs to be a thought process for why this happens. And I think it’s an interesting it’s a good question.