One of your most flexible
rollover
options
is moving your full account value into an
IRA.
An IRA gives you
greater freedom in choosing investments than a
401(k).
You can
decide for yourself whether you'd like to invest your retirement
assets in insured bank accounts, mutual funds, individual stocks
and bonds, or higher risk investments such as
options
or
futures.
You can choose among a wide range of IRA providers, or
custodians,
as well.
Rolling over to an IRA also gives you greater
control over when you withdraw your money. With a 401(k) plan,
you usually can't start taking withdrawals until after you retire.
An IRA is more flexible, since as soon as you turn 59 1/2, you're
allowed penalty-free withdrawals, even if you're still working.
Similarly, you usually must begin taking
money from your 401(k) as soon as you retire. If you have income
from other sources and don't want to take withdrawals from a tax-deferred
account that quickly, an IRA will let you postpone withdrawals
until April 1 of the year after you turn 70 1/2. In fact, many
retired people roll over their 401(k) retirement assets into IRAs
to avoid having to take money out.
Although you can leave the money you've rolled over into an IRA for the long term, you don't have to. You can also use an IRA to park your tax-deferred retirement assets until you're ready to move them to a new employer plan, without owing penalties or income tax.
