Broker Check

Transitioning Your
401K for a Brighter Future

Navigating your retirement decision and/or understanding employer plans like your 401(k) or Employee Stock Ownership Plan (ESOP) can be challenging-but it doesn't have to be. At Investor's Resource, we specialize in helping our clients understand complex investment, tax, and estate issues, and providing insight and guidance to help you get value from your investments—today, and tomorrow.

  • Wealth Management
  • Wealth Protection / Preservation
  • Wealth Transfer and Charitable Giving
  • Wealth Enhancement and Tax Planning

What Makes Us Different?

1. We focus on advice first, not products.

Unlike many brokerage operations, which provide recommendations in exchange for commissions, our advisors specialize in providing financial advice and investment management based on your best interests. We are not tied to any specific investment products, funds, or services - in fact, we are a multi-custodial firm. This allows us to compare and choose product and pricing options from several major custodians to fit the advice, plan, and your goals.

2. We act in your best interests.

Several of Investor’s Resource Team Members are CERTIFIED FINANCIAL PLANNERS™.  CFP® professionals meet rigorous education, training and ethical standards, and are committed to serving their clients' best interests.  We work hard to give you advice and create plans for all of your goals.

3. Our planning-based team has 30 years of experience with advanced credentials.

Three decades ago, our founder forged her career as a financial planner, well ahead of her time. We have weathered the storms of two financial crises and have over 30 years of experience with advanced retirement, tax, estate, and business training. 

Frequently Asked Questions

You may have questions about the process of Transitioning Your 401K to an IRA, and how to make the decision that's suitable for you. Here are some of the questions we hear most frequently:

 If I have left my employer, what are my choices regarding my assets in their 401K plan?

Choice 1: Leave It with Your Previous Employer

You may choose to do nothing and leave your account in your previous employer’s 401(k) plan. However, if your account balance is under a certain amount, be aware that your ex-employer may elect to distribute the funds to you.  

There may be reasons to keep your 401(k) with your previous employer — such as investments that are low cost or have limited availability outside of the plan. Other reasons are to maintain certain creditor protections that are unique to qualified retirement plans, or to retain the ability to borrow from it, if the plan allows for such loans to ex-employees.3

One downside to this choice is becoming disconnected from monitoring that old account and paying less attention to the ongoing management of its investments.  In addition, it's often hard to understand how those assets may compliment or cause excessive risk with other assets you own when you have several accounts in multiple locations.  

Choice 2: Transfer to Your New Employer’s 401(k) Plan or a Traditional Individual Retirement Account (IRA)

If you are employed and your employer has a similar retirement plan, check to see if that plan accepts the transfer of assets from a pre-existing 401(k).  If you are retired, or if your employer plan allows you an in-service rollover, you might consider whether the benefits of transferring your assets to a place where they can be managed together would be advantageous to you.  

All assets in a 401K retain the plan's strong creditor protections as well as any plan features like their loan provisions.  Especially if you think you need access to your retirement funds before 59 1/2, it might be worth keeping a portion of your assets in an employer plan simply to use the non-taxable loan feature.   

Accessing additional investment options could be one reason to either make a full break with your former employer's plan or roll your assets into a new or existing traditional IRA.By moving to an IRA, you can also choose to easily consolidate your all of your accounts with a single custodian or investment advisor.  In that regard, you might be able to more seamlessly coordinate an overall investment strategy and/or financial plan.  

Remember, don’t feel rushed into making a decision. You have time to consider your choices and may want to seek professional guidance to answer any questions you may have.

Choice 3: Cash out the account

The last choice is to simply cash out of the account.  However, if you choose to cash out, you may be required to pay ordinary income tax on the balance plus a 10% early withdrawal penalty if you are under age 59½. In addition, employers may hold onto 20% of your account balance to prepay the taxes you’ll owe.

Think carefully before deciding to cash out a retirement plan. Aside from the costs of the early withdrawal penalty, there’s an additional opportunity cost in taking money out of an account that could potentially grow on a tax-deferred basis. For example, taking $10,000 out of a 401(k) instead of rolling over into an account earning an average of 8% in tax-deferred earnings could leave you $100,000 short after 30 years.5


1. In most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plan in the year you turn 73. Withdrawals from your 401(k) or other defined contribution plans are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty.
2., 2022
3. A 401(k) loan not paid is deemed a distribution, subject to income taxes and a 10% tax penalty if the account owner is under 59½. If the account owner switches jobs or gets laid off, any outstanding 401(k) loan balance becomes due by the time the person files his or her federal tax return.
4. In most circumstances, once you reach age 73, you must begin taking required minimum distributions from a Traditional Individual Retirement Account (IRA). Withdrawals from Traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. You may continue to contribute to a Traditional IRA past age 70½ as long as you meet the earned-income requirement.
5. This is a hypothetical example used for illustrative purposes only. It is not representative of any specific investment or combination of investments.

Not everyone needs to hire a professional financial planner or investment advisor—but for some people, it can be helpful. Generally, the more assets and accounts you have, the more you stand to gain through hiring a professional. There's a common misconception that hiring an advisor will make you more in return. While this could be true, many clients tell us they hire us to help them avoid the big mistakes. Experienced advisors and their clients who have navigated through change often both attest that adding planning, estate, and tax strategy can add significant value over time to preserve wealth – instead of reaching for higher returns and taking on more risk.

If you aren't sure whether or not you will reach your financial goals with your current plan, you're concerned that your current wealth management strategy is inadequate, or you need assistance with wealth enhancement strategies, wealth preservation, or wealth transfer and giving, a financial planner can be an invaluable resource.

Ideally, your advisor should take the time to know you and understand your situation, have the right business model to support your needs, and provide you with acceptable returns for their services. If you have an advisor who meets these requirements, you are fortunate. If not, you may wish to consider looking for someone who does. It's important to note that there are many different types of financial advisors and investment professionals. Some just invest. Others plan. Some do both. To ensure you're getting an advisor who meets your needs, look for someone who works with clients that have assets and service requirements similar to yours. To learn more about how to choose the right financial planner, and what questions to ask, download our ebook.

Sure. A financial planner is not for everyone. If you're the "do-it-yourself" type, you may feel comfortable doing your own research and making your own investment decisions. For example, if you're considering rolling over your 401(k), you may simply decide on a Roth or traditional IRA, open a rollover IRA account, ask your 401(k) plan for a direct rollover, and choose your own investments. If this sounds intimidating, or if you don't have time to research the investments or if you want ongoing support to plan for retirement and beyond—working with a financial advisor can be helpful.

Unlike traditional large brokerage firms, Investor's Resource is not tied to any single company entity, product package, or product pricing. We are an independent, multi-custodial hybrid registered advisory firm. The investment options we recommend for you will vary depending on your current life stage, future goals, risk tolerance, and current market conditions. We will recommend investment options that are likely to provide the best balance of returns and principal preservation to meet your goals.

Most financial advisors' fees are based on a sliding scale of .5 to 2% of the overall account assets managed. Some advisors add planning or service fees, for specialty services. At Investor's Resource, our fees are dependent on each client's level of assets, and the amount of work needed over time. Generally, the higher the assets, the lower the fees.

Feel free to reach out to us at (256) 772-4646.

We would be happy to answer any questions you may have.

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