Rollovers May Offer Benefits When Changing Jobs

Rollovers May Offer Benefits When Changing Jobs

March 28, 2023

Consolidating retirement accounts can help your retirement immensely 

For many individuals, changing jobs can be an exciting opportunity to advance their career or pursue new interests. However, it can also present a challenge when it comes to managing their retirement savings.

When switching jobs, individuals may have options to leave their accounts with their former employer, cash out their accounts, rollover their accounts to another IRA or move their retirement accounts from their previous employer's plan to a new plan, which can be a complicated and time-consuming process. Your financial professional can make this process easier to help you stay on track with your retirement savings.

Retirement savings is a critical aspect of financial planning, and for most people, workplace retirement plans such as 401(k)s, 403(b)s, and 457 plans are the primary way they save for retirement. However, as individuals change jobs throughout their careers, they may accumulate multiple retirement accounts, making it difficult to keep track of and manage their savings effectively. Moreover, having multiple accounts can lead to unnecessary fees, and investment choices can be difficult to coordinate.

Rollovers Matter

The process of transferring a retirement account from one employer plan to another is called a rollover. A rollover can be complex and time-consuming, and it requires individuals to navigate a range of tax and legal requirements.

According to a study by the Transamerica Center for Retirement Studies:

  • Almost half of workers surveyed (45%) were unaware of what to do with their retirement savings when changing jobs;
  • Over half of workers (51%) actively choose to transfer their retirement savings when changing jobs; and
  • Almost a third of those who leave their savings in their previous employer's plan (31%) do so because they find the process of moving their savings too complicated.

Your Financial Professional

Your financial professional can educate you regarding the pros and cons of available options and help you consolidate your retirement accounts and streamline the rollover process. The benefits of your financial professional helping you do this are significant.

  1. It makes the rollover process much more accessible for individuals. By automating much of the process, your financial professional removes much of the hassle and uncertainty involved in moving retirement savings between employers. Workers can be confident that their savings are being moved efficiently and cost-effectively, and that their retirement planning is not being disrupted by job changes.
  2. Your financial professional can help you mitigate unnecessary fees and charges. When individuals have multiple retirement accounts, they may be paying duplicate fees and expenses for each account. By consolidating retirement savings, you reduce the number of accounts and fees paid, which helps you save money over the long term and keep more of your retirement savings working for you.
  3. Your financial professional can also help you make better investment decisions. When you have multiple retirement accounts, it can be challenging to coordinate investment strategies across those accounts. By consolidating retirement accounts, it is easier to develop a comprehensive investment plan that is aligned with your retirement goals.

As more and more workers change jobs throughout their careers, consolidating retirement accounts is becoming increasingly important, and it is an excellent option for individuals who want to simplify their retirement savings and invest in their future.


Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by FMeX.

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