FINRA Investor Alert

The IRA Rollover: 10 Tips to Making a Sound Decision

The decision to move your retirement nest egg or stay put is an important one, which usually involves significant funds. The largest source of IRA contributions comes from individuals who move their money from their employer-sponsored retirement plans, according to the Employee Benefit Research Institute.

“Workers and retirees should understand that in many cases they don’t have to act immediately upon switching jobs or retiring. Taking the time to compare costs and investment options can help you keep your nest egg from suffering unnecessary cracks,” said Gerri Walsh, FINRA’s Senior Vice President for Investor Education.

The IRA Rollover: 10 Tips to Making a Sound Decision provides practical help for those considering a rollover:

Minimize taxes by rolling Roth to Roth and traditional to traditional. No taxes are due if you roll over assets from a traditional plan to a traditional IRA, or if you roll over your contributions and earnings from a Roth plan to a Roth IRA.

Be wary of “free” or “no fee” claims. Even if there are no costs associated with a rollover itself, there will almost certainly be costs related to account administration, investment management or both.

Realize that conflicts of interest exist. Financial professionals who recommend an IRA rollover might earn commissions or other fees as a result.

Understand fees and expenses. Both employer-sponsored plans and IRAs involve investment-related expenses and plan or account fees.

Compare investment options and other services. An IRA often enables you to select from a broader range of investment options than are available in an employer plan, but might not offer the same options your employer plan does.

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