byAlma Abell

An employer-sponsored 401(k) account is one of the most effective ways to save for retirement. These accounts offer tax advantages and the convenience of adding money to the account before it even lands in the employee’s wallet. This type of plan is perfect for people who would find another way to spend the money if they got it in their hands. It offers an artificial discipline and helps build retirement savings. Some companies even match a small percentage of the amount the employee contributes. Most of these benefits are lost though, as soon as an employee terminates their relationship with the company.

An employee today may work for several different companies in their lifetime. In the transition, it’s easy to forget things like modest retirement savings accounts. However, by setting up a Rollover in Colusa instead of letting the account sit without any attention, investors can continue to build wealth and compound the money they saved as well as any employer contributions they may have earned during their tenure with the company.

A 401(k) could be rolled over into another 401(k) or into an IRA. The other, and less desirable option, is to convert the account to cash. Taking the cash might seem like a good idea when a person just left their job and has limited funds in their bank account. However, there are a couple of reasons why a Rollover in Colusa is a better choice. The first reason affects the former employee in the short term. Cashing in a 401(k) account results in a severe tax penalty. The cash value of the retirement account for someone who hasn’t reached retirement age is significantly less than it would be if it was rolled into a new account.

The other reason it’s better to do a rollover instead of taking the cash is that the value will continue to grow in a new account. Anyone who has recently left their job or plans to soon can Call us to learn more about their rollover options. Rolling over the account right away is the best way to avoid unnecessary losses due to lack of regular contributions to the retirement savings account.