Is It Time to Spring Clean Your Financial House?

If you spring clean your house, why not take some time to spring clean your finances too? If you have a 401(k), IRA, or other retirement account, this is especially important. Managing this area of your finances isn’t a ‘set it and forget it’ activity. Here’s how you can see if you need to take action to clean your financial house.

Review Your Retirement Accounts

Once you leave a job or are close to an important birthday such as age 55, 59 ½ or 72, you should consider what to do with your old 401(k) or other company plan, such as a 403(b), 401(a), etc. You may want to roll over funds from old 401(k)s to your current employer plan to make it easier to manage your money. For example, if your contracts at your old company are no longer current or your investment portal changes, it can mean more paperwork to keep track of. You can also roll over your old 401(k) into a traditional or Roth IRA. This could potentially open up a wider array of investment options and may allow you to have more control over your investments.[1]

Find Out How Much You’re Paying in 401(k) Fees

95% of 401(k) participants pay fees, ranging from under 0.5% to more than 2%, which can add up over the course of many years. Fees of 401(k)s, IRAs and other retirement accounts are an important consideration in deciding whether to leave your account at your old employer plan or roll it into your new 401(k) or into an IRA.

We can help you evaluate your fees and investment choices inside your 401(k) and help guide you to the best course of action.

Review Your Estate Plan

When was the last time you reviewed your estate plan and retirement account beneficiaries? Maybe you designated a beneficiary when you first established your retirement account and haven’t looked at the paperwork since. During that time, you may have gotten married, divorced, had children, or become involved with a charity you would like to leave money to. Even if you updated your will or set up a trust, you may need to update your retirement account beneficiary because beneficiary designations trump will and trust directives.[2] For example, you may want to divide your IRA equally among your children but only have the oldest one named as beneficiary because you forgot to make updates when your other children were born.  In essence, this means all of the monies will go to the one child, and that child will have to pay income taxes on the distributions from the inherited IRA or 401(k).

If you’re looking to spring clean any area of your finances, give us a call. We can assess your 401(k) fees, present alternative investment options, and help you create a plan tailored to you. Sign up for a complimentary financial review to speak to us about your retirement planning needs and get your questions and answered.