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When It's Time to Rollover...

It's your first day at a brand new company. W-2 forms, health benefits, dental insurance — it's enough to make your head spin. But somewhere among the multitude of forms you had to sign is one to start contributing to a 401(k) plan. Seems easy enough, contribute tax-free dollars into the plan, and your employer even matches a certain percentage. Hey, you think, it's basically free money.

So you were smart and took advantage of your company-sponsored retirement plan. You probably didn't even miss the few dollars from your paycheck that went into the 401(k) plan. Years passed and the time came when you decided to retire. Aside from the customary gold watch, you also now have a nice tidy sum resting in your 401(k). What then, is one to do with all these retirement dollars?

This is a question that many Americans have faced when they have decided to retire or switch employers. According to the Society of Professional Administrators and Recordkeepers, an estimated 6 million Americans retired or changed employers in 2001. It is also estimated that by 2010 baby boomers are expected to rollover $400 billion per year. As baby boomers start reaching the retirement age of 65, the dollars available for rollover (the ability to switch from the employer's plan to a self-directed IRA) is literally a financial windfall. (Society of Professional Administrators and Recordkeepers, Market Update 2001; Cerulli Edge-U.S. Edition, May 2002)

Once you leave your company, your 401k or profit sharing plan will become transportable, meaning you no longer have to own the mutual funds that were previously offered to you. This allows you to select how your assets will be invested and with whom you want to do business. Though you can't take the money out of your retirement plan without paying taxes (and a potential 10% penalty if you're under the age of 59 1/2), you can move it anywhere you choose as long as it remains under the retirement plan umbrella.

It has been increasingly common for retirement to last many years. That's why you should make every attempt to preserve and increase the principal in your nest egg so you can enjoy a comfortable retirement. According to Spectrum's research, 35% of all assets in mutual funds are retirement related and growing every day at an average of about 13% a year.

It is important to your financial well-being that you consider all the choices and inform your employer of your decisions before they pay out your distribution. The best way to start is to figure out your basic objectives - do you want mutual funds or a stock portfolio? Do you plan on managing your portfolio or have a professional manage it for you? New York Life's Rollover IRA Program enables you to direct your distribution into investments that address these issues. The Rollover IRA Program offers mutual funds, stocks, CDs and annuities that may help you meet a broad range of financial objectives.

The Retirement Consulting Group (RCG) — an experienced team of retirement consultants who understand the nuances of retirement planning — is designed to supplement the relationship you have with your financial professional. Contact RCG for all of your rollover and retirement related questions.


Securities are offered through NYLIFE Securities Inc. (Member FINRA, SIPC), A Licensed Insurance Agency.
A Licensed Insurance Agency
51 Madison Ave.,
New York, NY 10010

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When It's Time to Rollover...

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