Top Reasons to Roll Over Your 401(k) to an IRA

Kristian Finfrock
3 min readJun 23, 2021


The article and opinions in this publication are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you consult your accountant, tax, or legal advisor with regard to your individual situation.

Changing jobs can be stressful, but it opens the door for new opportunities for you and your 401k. The options include:

  • Cashing it out.
  • Letting it remain in its account.
  • Rolling it over into an individual retirement plan.
  • Transferring it into the account of your new employer’s 401k plan.

However, one thing that is for sure is that cashing it out before the recommended time is a bad idea as it will become entirely taxable and may be subject to early-distribution penalties. Instead, many people choose to roll it over into an IRA account for those who are not of retirement age. Below, we will discuss some of the top reasons to roll over a 401(k) into an IRA .

You have many more investment options

In the investment world, the 401k ranks as being very limited in choices. The primary options include mutual funds, which consist primarily of bond funds and equity funds. In contrast, with an IRA, you have many more options. Most investments become available to you when you choose to roll over to an IRA, including individual stocks, bonds, mutual funds, exchange-traded funds, annuities, real estate, and more.

More straightforward communication

Often, when a person chooses to leave their account in the hands of their previous employer, they are not treated with very speedy and helpful communication standards. As a result, it can be harder for you to receive information about your plan or even get in touch with an advisor or administrator. Therefore, you must have access to information in case something goes wrong at your previous occupation. As it will become entirely taxable and may be subject to early-distribution penalties.

Tricky rules

Tax codes surrounding company plans and IRAs are constantly evolving and full of potential tax

traps. You may have a Roth 401k or IRA that will be tax-free upon distribution that you need to

protect and preserve this coveted tax status. Or, you may have traditional 401k and IRA plans

that will be 100% taxable upon distribution that requires a strategic distribution plan to mitigate

tax consequences. And, if you own highly appreciated company stock, there may also be additional strategies to take advantage of discounted tax rates when separating service, so it is important to work with a trained professional knowledgeable in advising on these options and the pros and cons to consider with all of your options. As an active member of Ed Slott’s Elite IRA Advisor Group SM, I devote hours of training each year to maintain the latest education alongside the leading specialists in this area. I also have access to the team of America’s IRA Experts as my back-office support for complex cases to help with avoiding unnecessary taxes for retirement savings.

Securities offered through Kalos Capital, Inc. and Investment Advisory Services offered through Kalos Management, Inc., both at 11525 Park Woods Circle, Alpharetta, GA 30005, (678) 356–1100. Retirement Income Strategies is not an affiliate or subsidiary of Kalos Capital, Inc. or Kalos Management, Inc.

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Kristian Finfrock

Located in Madison, Wisconsin, Kristian Finfrock is the Founder of Retirement Income Strategies and a local radio show host. Learn more @