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<p>Have you retired and still have your 401(k) from work? If so, you should consider retiring your 401(k) as well, and transferring it to an Individual Retirement Account.</p><p>Here are six good reasons why:</p><p><strong>1. 401(k) plan guidelines can restrict your access to your money.</strong> The plan document is essentially the 401(k) rule book &#8212; and if it&#8217;s not in the book, you can&#8217;t do it. If you need access to the money in your 401(k), there may be restrictions on withdrawing your funds. IRAs can offer greater flexibility, and there are even certain rules which will allow you to withdraw funds from your IRA before 59&#189; without paying a penalty, just income taxes.</p><p><strong>2. Most 401(k) plans can have risky options.</strong> In the Market crash of 2008, many people who were just about to retire or already retired lost as much as 40 percent of the value of their 401(k)s to market decline and were forced to postpone their retirement or go back to work. Those who played it safe and moved their 401(k) into money market or stable value accounts were rewarded with little or no growth while inflation ate away at their purchasing power.</p><p>Today there are higher interest-rate, principal-protected programs which will protect retirees from losing their money when they need it most &#8212; and without sacrificing reasonable growth either. These programs are not available in a 401(k), but are available in an IRA.</p><p><strong>3. Many 401(k) plans do not allow Roth IRA conversions.</strong> You can only convert your 401(k) to a Roth if your plan documents have been updated according to the Pension Protection Act (2010). Otherwise, you can accomplish this by transferring to an IRA and then converting to a Roth with the help of a qualified tax professional. Once the Roth IRA conversion tax is paid, withdrawals after five years will be income tax free. Roth IRA income also doesn&#8217;t count toward your Social Security income tax and you will not be forced to take RMD withdrawals from a Roth IRA after age 70&#189;.</p><p><strong>4. Access to a financial professional.</strong> An IRA can give you access to an experienced financial professional who can show you what your best options are for your money. In a 401(k), your options are generally limited to just a small list of mutual funds, and little-to-no personal advice. Planning successfully for retirement is an important task which can be overwhelming. With some simple guidance from an experienced professional, you can be on the right track to a long and prosperous retirement.</p><p><strong>5. 401(k) plans have limited distribution options for your beneficiaries.</strong> If you pass away, your 401(k) will generally allow your non-spouse beneficiaries to withdraw the balance of the 401(k) over a maximum of only five years, creating a potentially significant tax burden for them. With an IRA, your non-spouse beneficiaries are not forced into rapid distribution and taxation. They can choose to receive a lasting income based on their life expectancy and spread out their tax burden using a &#8216;Stretch IRA.&#8217;</p><p><strong>6. Direct transfer of a 401(k) to an IRA is not taxable.</strong> If you rollover your 401(k), and a check is sent to you, then you only have 60 days to deposit the funds into an IRA, otherwise you pay income taxes. However, a direct transfer of a 401(k) to an IRA avoids all tax. If you are considering moving your 401(k) to an IRA, then a direct transfer is the optimal strategy, and it can be an easy process with the help of an experienced financial professional.</p><p>There are many advantages to an IRA, including increased flexibility and diversification. There are also safe Principal Protected and Guaranteed Income for Life programs available in an IRA which you simply cannot get in a 401(k). The help of an experienced financial professional to guide you through the financial maze and assist you in choosing the right programs may be the greatest benefit of all with an IRA.</p><p>Do this important financial planning now and prepare for a long and happy retirement.</p><style>
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<div class="metaInfo"><bylineMeta><p>Phil Goldstein</p><p>Guest columnist</p></bylineMeta></div><div class="metaInfo"><shirttailMeta><p>Phil Goldstein is a retirement specialist at 1st Financial Investments Inc. in Clarks Summit. He can be reached at 570-585-6100 or PGoldstein@1stFinancialInvestments.com.</p></shirttailMeta></div>

Phil Goldstein: Retirees should consider moving 401(k)s to IRAs