Have you ever been frustrated by the investment options in your company retirement plan? Maybe there are too few… Maybe there are two many and are overwhelming… Maybe there aren’t enough safe options…
Navigating the best way to invest inside your company retirement plan while retirement nears can not only be frustrating but can involve a tremendous amount of risk. Most company retirement plans weren’t built for the soon-to-be retired. They were built for the accumulator who has a higher appetite for risk, loss, and has time on their side.
Fortunately, there is a better option once you have reached the age of 59 ½ .
Most company retirement plans include in the Summary Plan Description an option for an “In-Service Rollover”. This is an option that is a no-brainer.
The in-service rollover option allows an individual still working at the company who is over the age of 59 ½ the option to rollover the current funds in their company retirement plan to a self-directed IRA account without any tax consequences.
The new self-directed IRA account can be invested in whatever the individual would like. It can include traditional investment options, safer investment options, annuities, trust deeds, REITs, rental properties, you name it.
Also, you do not have to forgo your ongoing contributions and matches from the company. It does not dissolve the current company retirement plan but keeps it in place in order for your contributions and the companies matches to continue.
There is no reason in my mind when individual over the age of 59 and ½ should not take advantage of the in-service rollover provision.
To determine whether or not your company has the in-service rollover provision, contact the investment provider who administers your plan, such as Fidelity, TIAA-CREF, Prudential, Principal, etc.
Keep in mind that even though most larger companies allow for it, the investment company is not going to advertise it since they did not want to lose the funds.
Have you ever used an “In-Service Rollover”?
