I’m retiring at the end of this year and have about $108,000 in my 401(k) that I need to move. How can I find information on how to move this money? Is it a bad idea to hire a financial advisor for just this task? Or should I consider hiring one to look at my finances more broadly after retirement?
Well, moving your 401(k) might not be necessary, though seeking better investment options could be. You might not need a financial advisor specifically for the rollover, but experts suggest that a one-time financial plan could be useful for your retirement. You can check out a tool that connects you with fiduciary advisors to help with that.
A good starting point is to consult your company’s human resources department—they can clarify the 401(k) rules. According to Derek Jones, a certified financial analyst, they either have knowledgeable staff or can connect you with your plan administrator. Plus, the plan’s summary should be available online.
There are several options for distributing your 401(k). Jones recommends consulting a financial professional to weigh the pros and cons of each. You could keep your money there and receive regular cash distributions, roll it into an IRA, or convert part of your funds into an annuity for ongoing payments. Once the plan is understood, you might find that switching isn’t necessary.
Instead of getting overwhelmed, remember that many 401(k) custodians can assist with moving your assets. The right information can help you spot any red flags, especially if a custodian seems to push for an expensive solution.
Jamie Eversole from Eversole Financial adds that remaining in your current 401(k) can have benefits, like better creditor protection and sometimes lower fees. Start with HR to explore your options, as they can guide whether a rollover is the right move.
Setting up a rollover IRA usually takes just a few minutes on most platforms. Eversole emphasizes that for fiduciary-to-trustee transactions, transferring directly from your current account is vital to avoid taxes or garnished funds.
Be cautious about your next steps—after all, you’ve worked hard for those funds. Ensure the new account is flexible, cost-effective, and tax-efficient. For many nearing retirement, a direct rollover to an IRA is often the cleanest path, keeping your tax-deferred status and maximally expanding your investment choices.
Need an advisor?
401(k) transitions can be straightforward, but making selections about financial institutions and structuring assets can lead to costly mistakes. Hiring an advisor for a rollover might feel excessive, but if you’re approaching retirement, a comprehensive financial health check can be beneficial. Accumulation and distribution have different strategies, and a planner can teach you how to withdraw efficiently or manage risk to ensure your funds last.
Brad Clark, an investment advisor, suggests reaching out to an independent financial advisor. They offer an unbiased perspective on retirement planning and can help navigate complex issues like tax strategy or required minimum distributions. They can also help determine whether your $108,000, along with any other benefits, is sufficient for retirement or if you should save more.
For finding a professional, Clark recommends the Dave Ramsey SmartVestor Pro program. Check the legal standards an advisor operates under—fiduciaries must prioritize your best interests, while others may simply recommend suitable options which could involve higher fees.
Besides managing 401(k)s, advisors offer valuable insight in areas like retirement planning and tax strategy. Retirement has many complex rules that most aren’t aware of, and detailed planning can really pay off.
If you’d rather handle this yourself, some advisors provide one-time consultations for transitions. It’s a budget-friendly approach to validate your plan without the commitment of ongoing management. One session can yield substantial insights.
For the cost perspective, one-time plans generally range from $1,500 to $7,500, while hourly rates can fall between $200 and $500, depending on your location and case complexity. Considering your situation at $108,000, you might not fit the criteria for working with an advisor who charges based on assets under management, but ongoing support may also not be necessary.
If you have questions or issues with your financial planner, email your concerns for assistance.
Question has been edited for brevity and clarity. By sending a question, you agree to have it published anonymously.
