From a tax point of view, the very best plan out there is the Roth IRA. Earnings in that account are completely tax free at retirement. 401K money is merely tax deferred until retirement.So if you can afford to pay income taxes on the money now, I would rollover the old 401K into an IRA and then convert it to a Roth.Because expenses of 401K are often subsidized by your employer, they are often lower in cost than IRA or Roth IRA accounts. Most 401Ks also allow penalty free distributions at age 55 (if you leave the employer after age 55) rather than 59-1/2 otherwise or with IRAs. However, in either case an SEPP payment plan can get you your money earlier if you decide to retire early.Most people think the wide array of investment choices and the ability to move your account freely to another custodian make IRAs and Roths highly preferred over 401Ks in most cases.
Best Of |
Favorites & Replies |