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Considering Leaving Your 401(k) with Your Employer in Retirement: Pros and Cons

Doug Kronk • Nov 22, 2023

Retirement decisions can often feel overwhelming, especially when it comes to managing your hard-earned savings. Lately, I've observed an intriguing trend among retiring clients—more employers are offering the option to retain your funds in their 401(k) plans post-retirement. This shift prompts a reconsideration of the traditional approach to retirement savings, presenting both opportunities and considerations worth exploring.


Evolution of Perspective


Employer-sponsored 401(k) plans, once seen merely as a savings vessel, are now emerging as potential income streams during retirement. To accommodate this shift in perspective, many plan sponsors are incorporating in-plan annuities into their employees' investment choices.


As retirement approaches, you might find yourself with the option to leave your assets where they currently reside. Here's a closer look at the pros and cons to weigh while making this pivotal decision.


Pros of Keeping Your 401(k) with Your Employer


Fee Savings: Sticking with your employer's 401(k) could mean savings on fees. Institutions often secure funds at better rates, potentially reducing costs for you.


Access to Stable Value Funds: These funds within a 401(k) offer stability akin to money market funds but with potentially higher interest rates.


Federal Protection: Federal laws shield 401(k) funds from creditor judgments, providing a layer of protection, excluding certain circumstances like IRS tax liens or spousal/child support orders, including bankruptcy.


Annuity Options: Some plans offer annuity choices, promising consistent, guaranteed payouts resembling a pension throughout your life.

Cons of Not Rolling Over Your 401(k) to an IRA


No New Contributions or Employer Matches: After retirement, you won't be able to make fresh contributions or benefit from employer matches.


Limited Investment Choices: Compared to the broader array in an IRA, a typical 401(k) might offer a more restricted selection of investment options.


Complexity in Management: Managing multiple retirement accounts could become cumbersome. Consolidating them into a single IRA might simplify your financial oversight.


This is indeed a weighty decision, and your unique circumstances will heavily influence the right choice. I'm here to guide you through this process. Once you have an approximate retirement date in mind, it's wise to inquire about your options. Even better, let's connect and review these choices together. Remember, I'm just a call or email away, always ready to assist.


Taking the time to weigh these factors will ensure your retirement strategy aligns perfectly with your financial aspirations and needs.

How “Higher for Longer” Interest Rates Can Impact Your Investments

By Doug Kronk • 02 May, 2024
The stock market has had a rough ride this past month. The S&P 500 index closed out April at 5035.69, down over 200 points (-4.2%) since the close of March. Investors have become pessimistic and frustrated, and it’s largely because the deep interest-rate cuts that the market expected early in the year just aren’t materializing. The “good news” coming out of the Fed’s May 1 meeting was that Chairman Powell didn’t see any new rate INCREASES on the horizon. While there will certainly be opportunities to make money in a high interest rate stock market, investors would be well-served to evaluate their holdings and potentially make some changes.

Trusts and Tax Rates: Some Notable Considerations

By Doug Kronk • 04 Apr, 2024
Trusts are a legal entity that is commonly used to hold assets for future distribution or management purposes. For example, it is common for some families to create a trust to fund their children’s college education, contributing funds that the children can later withdraw to pay their college expenses while going to school. It is also common to place the family home and assets into a trust that will own the property, potentially indefinitely, to ensure the home, its furnishings, and additional assets always stay within the family. Trusts and taxes can become very complicated, however. To be certain that you make good decisions, it is advisable that you work with a team that specializes in this area to help clarify relevant issues, such as a financial advisor, CPA, and an attorney. 
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