Consumers nearing retirement must make numerous investment decisions. When to withdraw from an IRA is one of them.
Purchasing a life insurance policy is one option for those who want to ensure the financial security of their survivors.
Traditional and Roth IRAs may also be advantageous. However, according to a Wall Street Journal report, rolling funds from a 401(k) to this type of investment may be difficult for some, as many employers want to keep their employees’ savings.
“Big IRA players are fighting back,” the report said. “Firms like Charles Schwab Corp., Fidelity Investments and Scottrade in recent months have rolled out new online calculators, blogs and other features in an effort to boost their IRA business.”
If consumers cannot obtain clear information on the fees they pay, they may consider withdrawing from the 401(k). According to the report, they need to access their savings before the age of 59 1/2, or they would prefer more investment options. Leaving funds in a 401(k) allows them to avoid the taxes associated with rolling into a Roth IRA.
Keeping an employee’s savings allows businesses to increase their asset base, giving them more negotiating power with retirement plan providers. Individuals can avoid withdrawal taxes by putting them in a Roth IRA.