Rolling over a 401K into an IRA is a topic of concern for many professionals as they prepare for retirement. A 401k rollover is essentially a maneuver that allows you to move retirement money invested in a 401k into an IRA.
People typically rollover 401k investments into IRAs when they change jobs. Rolling your 401k over helps you avoid tax penalties you could incur if you had your former employer directly release the money to you. Rolling over your 401k into an IRA also allows you to have more control over your retirement savings.
An IRA is essentially a retirement savings account that allows contributions up to a certain amount per year and allows account holders to invest their savings in certain investments, typically stocks, bonds and securities. These accounts have tax advantages that account holders can take advantage of to contribute after-tax earnings and allow those contributions to grow tax deferred, or they may be able to contribute pre-tax dollars and pay taxes on the money they withdraw when they retire.
IRA’s have some unfortunate drawbacks, however. You’re limited in how much you can contribute to your IRA per year and there are also some very severe restrictions in your options for early withdrawal or borrowing money from your account.
If you’d like to save more for retirement, ensuring that you’ll have sufficient funds to continue to enjoy your current lifestyle once your working years are over, consider supplementing your IRA savings by purchasing a life insurance policy with equity-indexed interest crediting. In addition to providing your family with assured income should you die unexpectedly before retirement, an equity-indexed life insurance policy provides a great way to save money for retirement.
Equity-indexed policies are among the safest investments and are guaranteed not to lose the principal of your policy. Also, with careful financial planning, they can be set up to grow tax-deferred and then pay out an income that can be tax-free. There are no limits on contributions to these policies and they can provide a great supplement to your IRA or 401k savings.
The key to getting the most out of an equity-indexed policy is having a great financial advisor guide you through setting up the policy and structuring the retirement income to gain maximum tax advantages. If you’re considering setting up an equity indexed life insurance policy, find a financial planner with experience in these policies to help keep your golden years golden.