Jul 15, 2022 2 mins read

Why You Should Rollover 401(k) to Your IRA

If you have a 401(k) account with your current employer, there’s only so much you can do with it if you decide to transfer to another job. You may have the option to leave it be if the employer allows so, cash it out and pay taxes, transfer to your new employer’s account and pay the fees, or roll it over to your commoditized or precious metals IRA account.

What is a 401(k)

A 401(k) is a retirement and savings plan employers offer to their employees. This investment plan allows employees to contribute a fraction of their annual income to a savings account where the capital is kept safe without the obligations of taxes.

The taxes of the income saved are either applied at the time of the contribution or at the time of withdrawal. Though, it’s suggested that employees don’t use their capital until retirement for a shorter tax bracket and more cash on hand.

401(k) allows an annual contribution of $20,500, as per the amendments made in the 2022 policy. Traditionally, the contribution was limited to $18,500 in 2020 and $19,500 in 2021. Employees over 50 can make an annual contribution of $27,000 as per the 2022 amendment. The contribution figure was previously fixed at $26000 in 2021.

About 60 million private employees in the United States contribute to a 401(k) account every year. The countrywide 401(k) accounts are estimated to be worth $4.8 trillion as of 2021.

Individual Retirement Account – what is it?

Now that we know about an employer’s 401(k) savings account, let’s talk about IRA. IRA or Individual Retirement Accounts is a savings account set up by various financial institutions. These accounts allow an individual to make their investment in the form of bonds, stocks, mutual funds, or gold & silver IRA, and have their assets grow with time without the obligation of taxes and other government-initiated financial policies.

Why Rollover 401(k) to IRA?

Following are some of the advantages of rolling over 401(k) to your IRA:

The Fee Difference

401(k) takes up a lot of fees to keep the account in existence. This fee is usually directed to the administrative and management aspect of the account. Rolling over your 401(k) to IRA will reduce a significant amount of costs that may consume a large fraction of your savings.

Better Advisors

If you choose to leave your 401(k) with your former employer, you may feel hindered in communication. You may find it tough to communicate the planning and have access to your savings account.

More Investment Opportunities

Your 401(k) account can only be contributed with your annual salary. IRA allows several investment opportunities for people, including mutual funds, stocks, bonds, gold and silver investments, etc.

401(k) may limit your access to the account in a calendar year, whereas IRA allows you maximum opportunities to recalibrate throughout the year and balance your portfolio.

Orion Metal Exchange is one of the most renowned gold IRA companies in the United States. We’ve served numerous clients in LA and elsewhere in the country for more than 50 years.

We can help you with your precious metals IRA, gold IRA rollover, buying gold and silver bullion, and precious metal storage.