There are several reasons why a person might consider moving 401k assets into an Individual Retirement Account (IRA). Visiting a qualified financial advisor can help you discuss your plan options and restrictions and consider alternatives.

• Asset Consolidation – You may have worked for multiple employers during your career. If so, you may have multiple 401k accounts with different investment allocations. It may be beneficial to consolidate your accounts. Doing so could make it easier to track your assets and allow you to assess whether your retirement investments are adequate.

• Greater investment options – Your employer-based 401k plan has limited investment options. Converting your 401k plan to an IRA will likely increase your investment options. This may allow you to better achieve your investment objectives by increasing your access to a wider variety of asset classes and different investment funds.

Your plan may also be limited to multiple proprietary funds and may not include high-yield mutual funds. Understanding what investment options your 401k offers can be important in determining your ability to create an appropriate investment strategy within the plan or whether you’d be better served elsewhere.

Understanding your investment options is particularly important when we are in “bear markets.” It takes more experience and supervision to perform well in a bear market than in a bull market. Having more investment options and a broader set of asset classes could make all the difference in preserving and growing your assets.

• Remove restrictions on the sale of investments – Some 401k plans restrict matching money in a 401k account. This is common with company stocks. Participants cannot sell company stock while in the 401k plan. Executing a direct transfer to an IRA when company stock can be sent in the form of stock would solve the problem. Once the shares are in the IRA, you can decide to keep them or sell them. Also, some companies limit the number of trades non-active employees can make. Moving to an IRA account would remove these restrictions and limitations.

• Guidance and professional service. Let’s face it: today you can get investment advice from countless sources. However, determining which advice to trust is difficult. Getting advice from 401k administrators can also be a challenge. You can hardly expect to develop a personal relationship with someone who works for the administrator. The 401k administrator is simply a record keeper for most participants.

You may have established other investment accounts and developed a relationship with a financial advisor. This person knows you and your family, he knows your goals and style, and he is someone you have built trust with.

Your advisor is usually just a phone call away, not an anonymous voice at the end of a service center phone line. You know the advisor and have an idea of ​​his knowledge and investment philosophy. Your advisor can also bring a holistic perspective to your financial planning, understanding more than just your retirement assets.

• Simplify your sources of income – If you’ve had multiple employers and/or set up an individual retirement account, you may receive distributions from multiple places. You can simplify your distribution flow by consolidating your accounts. You can pool multiple accounts and enjoy easy distribution by rolling your 401k assets into an IRA.

• Separation from previous employer: Leaving a job may not be a pleasant experience. You may be forced to retire or be laid off. If your departure from your previous employer was not on good terms, you may want to take your retirement assets with you. Even though your former employer can’t “touch” your 401k, the employer is still in charge of the plan and can change it if necessary. They can change carriers, modify the fee schedule, or remove investment options. The employer retains indirect control over your account and will make plan decisions based on objectives that do not consider your goals.

• Increase withdrawal flexibility in retirement: Withdrawal flexibility varies among 401k plans. Some plans do not offer partial withdrawals for retirees. Others limit the number of withdrawals that participants can make annually. On the other hand, IRA accounts offer unlimited availability of withdrawals. Clients can withdraw money as often as they like in varying amounts. However, please understand that these withdrawals may have taxable implications based on age. You have worked hard to save money for retirement. It makes sense to invest your money in a vehicle that gives you the flexibility to respond to your changing needs over time.

• Prorated Withdrawals – When 401k clients make withdrawals, the money often comes out prorated. This means that money is withdrawn from the account at the same percentages that were invested in your 401k plan. The client cannot select which fund or funds within the plan to withdraw money from. This may force you to sell investments you like, such as company stock or a favorite fund.

IRA accounts don’t work that way. With an IRA, you can select which funds to withdraw from, allowing you to withdraw in the way that best suits your goals and needs.

• Personalized Tax Withholding – An IRA offers other retirement benefits. When you withdraw from a 401k plan, the manager must withhold a minimum of 20 percent for income taxes. Customers can choose to have a higher amount withheld, but cannot choose a lower amount. IRAs allow you to determine how much to withhold from a distribution to cover taxes. So if you withdraw $35,000 in January and want to withhold only 10 percent for taxes, you can. Why give the IRS more than you think you’ll owe and give it to them months in advance?

• Improve the transfer of resources to non-marital beneficiaries: 401k plans do not transfer well to non-marital beneficiaries. In many cases, non-spousal beneficiaries must receive a lump-sum distribution or receive distributions over a five-year period. This does not allow non-spousal beneficiaries to “spread out” the use of this money over an extended period of time.

Any distribution would also be taxed in the non-marital beneficiary’s income tax bracket, which could be when the person is in the highest tax bracket they will reach. Converting your 401k to an IRA would improve the transfer of resources to a non-marital beneficiary. An IRA allows people to defer withdrawals until they reach retirement and to stretch withdrawals over their life expectancy.