IRA’s and Rollovers
Individual Retirement Accounts, commonly referred to as IRA’s, have become a valuable component to one’s retirement income. Yet ironically they are sometimes ignored and even forgotten about at a previous company’s 401k account. Job changes can be stressful and time-consuming, and the 401k can be put on the back burner indefinitely.
Decades ago many companies had what is known as “Pension Plans.” People would work at a Government job, or a local utility company, etc., and at retirement they would have a pension that would pay them a retirement income for the rest of their lives. These are known as “Defined Benefit Plans.”
Things have changed. Defined Benefit Plans were very expensive to operate, and they put the obligation on the employer to provide the stated benefits to the employee at retirement and for the rest of their lives. It was difficult to predict how much the company’s retirement money would perform, and sometimes it would underperform, requiring the company to add additional monies to the plan to continue paying the retirees.
Forty years ago the “401(k)” Plan was established. These are “Defined Contribution Plans,” which means that the amounts contributed to an employee’s account is a set amount. But what the amount grows to at retirement is the responsibility of the employee, not the employer. This gives the employee the flexibility, and responsibility, of where to invest their money.
This also created IRA Rollovers. When an employee leaves a company they can take their money (Roll it over) to wherever they chose. This becomes their Individual Retirement Account, known as an IRA. The individual can then have control over their money and choose where they want to invest it. An employee may not want to keep their money with a company that they no longer work for. And there may be limited investment choices at their previous company.
Young Financial specializes in Retirement Funds, and we would like to work with you on your IRA Rollover. Please see the section on “Our Products” to see the many types of investments and insurance products that we can work together on in setting up your own Individual Retirement Account.