{"id":107,"date":"2012-06-25T00:00:00","date_gmt":"2012-06-25T00:00:00","guid":{"rendered":"https:\/\/empowernetwork.com\/freedomwithpeter\/old401ks\/"},"modified":"2026-07-26T20:42:19","modified_gmt":"2026-07-26T20:42:19","slug":"old401ks","status":"publish","type":"post","link":"https:\/\/empowernetwork.com\/freedomwithpeter\/old401ks\/","title":{"rendered":"Old 401(k)s? What to Do"},"content":{"rendered":"

Overture: <\/strong>
\nHave fun while listening to the tracks chosen as the soundtrack to Today\u2019s
\n\u201cEmpowering Freedom with the Empower Network<\/a>\u201d
\nBlogs.<\/p>\n

Real people, helping real people\u2026.<\/span><\/p>\n

Hi There, Friends of Freedom:<\/strong><\/strong><\/p>\n

As is my custom, I was sitting with my morning beverage today<\/p>\n

looking through the investment and investor news<\/span><\/p>\n

getting a handle on what the media might be talking about<\/p>\n

that would spook my clients and de-rail them from the plans<\/p>\n

we have put together to ensure that:<\/p>\n

1. The family is financially protected<\/span> in the event that they would \u201cdie too soon\u201d<\/strong><\/p>\n

2. They are moving into the \u201ccash cycle\u201d<\/span> and out of the \u201cdebt cycle\u201d , and<\/strong><\/p>\n

3. They are set up for financial freedom<\/span>, never having to worry about \u201cliving too long\u201d<\/strong><\/p>\n

The following post<\/p>\n

Cramer on Retirement: What to Do With Old 401(k)s<\/h2>\n

found me. Hmmm\u2026 I had to learn more.<\/p>\n

Jim Cramer<\/span> of the<\/span> The Street<\/span><\/span> wrote<\/p>\n

If you\u2019re leaving a job, or worse, suddenly laid off, the last thing on your mind is your retirement<\/span> account.<\/strong> You mean to get around to rolling your money over into an IRA, but the world has turned upside down and you\u2019re faced with more urgent priorities such as beginning a painful job search or grabbing the best retirement<\/span> options. No wonder 32% of workers leave their retirement savings in their former employers\u2019 401(k)<\/span> plans. Employers love it when you do nothing. The more assets a plan has, including money from former employees and retirees, the easier it is for sponsors to negotiate with plan providers for better terms and lower fees.<\/p>\n

But that\u2019s no reason to let them keep your money hostage.<\/strong><\/p>\n

Here are just a few reasons why you should take charge and roll that money over today:<\/p>\n

Better investments<\/strong><\/span><\/p>\n

\u201cWith your 401(k)<\/span> your investments<\/span> are limited to whatever the plan offers,<\/strong>\u201d says Judith Ward, a certified financial planner with T. Rowe Price. \u201cWith an IRA<\/span> you can have an account anywhere and you\u2019ve got whatever investment choices you want.\u201d<\/p>\n

More choices means you can more effectively diversify your retirement savings<\/span><\/strong> and offset the choices in your current employer\u2019s plan by using individual stocks or investments in asset classes such as real estate, commodities or energy that aren\u2019t always available in company retirement plans.<\/p>\n

Flexibility<\/strong><\/span><\/p>\n

With an IRA<\/span> you may withdraw money whenever you want to<\/strong>. If it is before you reach age 59 1\/2 you may have to pay taxes and\/or penalties but you can still get to your money. Employer retirement plans are trickier<\/span>, says Ward. Often the only way to get cash is to take a loan against your 401(k) or prove you qualify for a hardship withdrawal, she explains.<\/p>\n

What\u2019s more, you\u2019re also subject to whatever rules your employer may impose on your 401(k) plan, including how you may take your withdrawals during retirement.<\/strong> With some plans, these rules can get complicated and may affect your income stream.<\/p>\n

Tax Diversity<\/strong><\/span><\/p>\n

So, have we convinced you yet?<\/strong> If so, you have another decision to make Should you rollover to a traditional IRA or a Roth<\/span>? Unlike a traditional IRA, contributions to a Roth are not tax deductible. However, you\u2019ll pay no income tax on withdrawals during retirement. With both types of IRAs your earnings continue to grow tax free.<\/p>\n

If you roll over into a Roth IRA you\u2019ll be liable for taxes on your 401(k) contributions<\/strong>. Rolling over your entire account is unrealistic for most people because of the huge tax bill. Better, says Ward, to first put the money in a traditional IRA then gradually move a portion of it into a Roth.<\/p>\n

That way, with part of your money in a traditional IRA or 401(k), and part in a Roth, you hedge your tax bets.<\/strong> If your income tax rate goes down in retirement, a traditional IRA works in your favor. If rates are higher than you expected, the Roth will help ease the burden.<\/p>\n

To learn more,<\/strong> including \u201cThe One Exception\u201d and \u201cDealing With The Paperwork, to read the article in full,<\/p>\n

Cramer on Retirement: What to Do With Old 401(k)s<\/h2>\n

Related Media<\/strong><\/h3>\n

1. Cramer on Retirement: Can Master Limited Partnerships Hurt Your IRA?<\/em> (article)
\n2. Cramer on Retirement: Individual Stocks Are Right for Your 401(k)<\/em> (article)
\n3. Cramer on Retirement: The Trouble With Target Funds<\/em> (article)
\n4. <\/p>\n