Retirement Planner Reveals Secret 401k Rollover Strategy Today
The Benefits of a 401k Rollover
One of the primary advantages of rolling over your 401k into an IRA is the expanded investment options. While employer-sponsored 401k plans often have a limited selection of mutual funds, IRAs typically offer a broader range of investment choices, including stocks, bonds, ETFs, and more. This flexibility can allow you to tailor your investment portfolio to better align with your financial goals and risk tolerance.
Additionally, IRAs often come with lower fees than many 401k plans. According to a study by the Investment Company Institute, the average expense ratio for equity mutual funds in 401k plans was 0.45% in 20201. In contrast, many low-cost index funds available through IRAs have expense ratios as low as 0.03%2. Reducing fees can significantly impact your retirement savings over time, potentially adding thousands of dollars to your retirement fund.