Bass Financial Solutions, Inc.

Are you an employee of a large corporation? Are you aware of a potentially hidden opportunity to rollover some of your 401k while still employed with your current employer?

For many years, if you invested in your company’s 401k retirement plan, you were required to keep the money there, no matter how good or bad the investment choices were. You were basically locked into the 15 or so investment choices offered. New regulations now give you the power to shift your assets and diversify your investments giving you greater flexibility and control over how your money is to be invested.

Employees working for most major corporations have the opportunity to make contributions, pre-taxed into their 401k plans.  If they are fortunate enough, their company might even “match” those contributions.  In other words, for every dollar you put in, the company will contribute a matching amount.  From a financial planning perspective, it makes tremendous sense to take advantage of this opportunity.
 
However, there is one problem with many 401k plans. It’s the lack of investment choices available.  Many corporate 401k plans do not offer the variety of funds necessary to create a truly well balanced portfolio. Worst yet, money in your 401k is usually subject to market fluctuation. This means in a down market you could potentially loose much of your hard earned savings.

There are now new options that allow you the opportunity to upgrade your 401k portfolio.

From your 401k, you are now allowed to make a tax free exchange into a self directed IRA through what is known as an “in service distribution”. The amount eligible to be rolled into your own IRA may vary from company to company. It often times represents a significant amount of the total of your 401k. Once the “in service distribution” rollover is completed, you still retain the ability to contribute to the 401k plan pre-taxed as you always have. If you have a significant amount of your 401k in your company’s stock, you can still hold onto the company stock inside your 401k and invest the difference in a more diverse portfolio within your new self directed IRA.
 
This “in service distribution” strategy enables you to bring to your portfolio, investments not offered in your current 401k.