$35,000 Rollover from 401k to IRA
Benefits of Rollover from 401k to IRA
Are you considering rolling over your $35,000 from your 401k to an IRA? Here are some benefits to consider:
- More control over investments
- Potential for lower fees
- More investment options
- Consolidation of retirement accounts
Traditional IRA Vs Roth IRA
When deciding where to rollover your funds, it’s essential to understand the differences between a Traditional IRA and a Roth IRA:
- Traditional IRA: Contributions are tax-deferred, meaning you pay taxes upon withdrawal. Ideal for those in a higher tax bracket now than in retirement.
- Roth IRA: Contributions are post-tax, meaning withdrawals are tax-free. Suitable for those expecting to be in a higher tax bracket in retirement.
Diversification of Funds
One crucial aspect to consider when managing your Traditional IRA is the diversification of funds. Should you hold the same index funds as your Roth account, or should you consider other options like individual stocks?
- Keeping the same index funds in both accounts can provide consistency in your investment strategy.
- Adding individual stocks to your Traditional IRA can offer additional diversification and potentially higher returns.
Long-Term Investment Strategy
It’s essential to have a clear long-term investment strategy for your Traditional IRA:
- Avoid aggressive trading and focus on long-term holds.
- Ride the market waves and stay patient during periods of volatility.
Seeking Professional Advice
While considering your options, it’s always beneficial to seek advice from a financial advisor. They can help you tailor a strategy that aligns with your financial goals and risk tolerance.
In conclusion, rolling over $35,000 from your 401k to an IRA offers you the opportunity to take more control over your investments. By carefully considering your investment options, diversifying your funds, and developing a long-term strategy, you can set yourself on the path towards a secure retirement.
It’s not silly to hold the same funds. Those are already diversified funds. Since your goal is “long term holds”, “do not intend to aggressively trade”, “ride the market”, then you should stay away from “individual stocks”.
Same funds are fine.
As you get close to retirement consider holding more bonds in your traditional account than roth account. This gets you the stability of income from bonds with less long term growth in the account you have to still pay income tax on and lets your roth account grow with more equities.
Keep doing what you’re doing right now though
There’s nothing wrong with having the same funds across multiple retirement accounts. However, considering your Roth IRA consists of US-only funds, adding some international diversification in your Trad IRA is worth considering. Plus bonds depending on your age and risk tolerance.