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Funderburk Financial

Four Reasons You Might Not Want to Rollover Your 401(k) in an IRA


1. Early Retirement - If you are planning to retire between the ages of 55 and 59 1/2, it may be in your best interest to stay with your 401(k). Most 401(k)s will allow retired former employees to withdraw from their 401(k) without a 10% penalty at age 55. This does not occur for an IRA until 59 1/2 years to age.

2. Net Unrealized Appreciation (NUA) - If your 401(k) contains appreciated company stock, you may gain tax advantages by taking a direct distribution of the stock. You will lose this ability should you roll the stock over into an IRA. You should consult a tax advisor for a more detailed explanation of this tax break.

3. Creditor Protection - 401(k)s receive federal protection relating to creditors. IRAs received creditor protection at the state level and this can vary substantially from state to state.

4. Life Insurance - 401(k) assets can be invested into life insurance. This is not the case with IRAs. In some cases, the life insurance in a company plan might be the only life insurance that a person could qualify for.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.