When you leave an employer or transition into retirement, an important financial decision is whether to leave your money in your 401(k) or roll it over into an IRA. What is the difference between these types of accounts? Is an IRA a better option? The purpose of this podcast and article is to list 5 specific reasons you might consider moving from a 401(k) to an IRA. I’ll also mention some instances when it might not make sense.
THE RISE OF THE 401(K)
The percentage of Americans who have been covered by a defined benefit pension plan that is paid out as an annuity has been steadily declining the last 25 years. These plans were often characterized by a company paying a certain amount per month through retirement for a specific number of years worked, commonly based on a percentage of salary. 

On the flip side, defined contribution plans (often a 401(k)) have been on the rise as employers transfer the risk of paying for retirement from their pocket to their employees. 

Many employers offer 401(k)s to their employees, often matching a percentage of the employees contribution up to a certain amount. An added benefit is that these plans are tax-deferred or tax-advantaged, meaning that money put in a 401(k) is pre-tax money and will be taxed later when it is withdrawn. You’ll pay ordinary income tax, just like your salary, on your withdrawal. In most cases, accessing your 401(k) money prior to 59 ½ will add a 10% penalty.

For many reasons, there is a lot of wisdom in taking full advantage of your 401(k), especially up to the match. The employer's contribution can be viewed as “free money” or additional salary. 

That being said, if you’re near retirement and have been a saver, you’ve probably accumulated a significant portion of your retirement nest egg in your 401(k). It’s not uncommon to work with clients that have between several hundred thousand to more than a million in their 401(k)s and tax-deferred accounts.
5 REASONS TO CONSIDER ROLLING OVER YOUR 401(K) TO AN IRA
While a 401(k) can be a great tax-deferred financial vehicle, especially for those getting an employer match, it’s my belief that a 401(k) simply doesn’t give my clients the necessary tools they should have access to during their retirement years. 

An IRA is also a tax-deferred vehicle just like a 401(k) but with additional options during retirement. While this isn’t a comprehensive article or podcast on the difference between a 401(k) and IRA, I’m going to touch on 5 reasons to consider an IRA.
#1 - GREATER INVESTMENT CHOICE AND FLEXIBILITY
The investment options in your 401(k) are selected by the plan administrator and aren’t up for negotiation. If you aren’t ecstatic about the investments available, there really isn’t anything you can do about it. Also, the investment choices are built for the masses and aren’t generally customizable, meaning vanilla is all you’re going to get. There are a limited number of choices available.

An IRA, on the other hand, has thousands of investment options, depending on who you work with. The flexibility of an IRA gives experienced wealth managers and investors choice and control.

An example of this flexibility can occur when an investor reaches the age of 70 ½. If you want to give to charity (i.e. tithing to your church), you can donate directly to your charity from your IRA in the form of a QCD (Qualified Charitable Distribution). A QCD excludes the amount you donate from taxable income and counts for your RMD (Required Minimum Distributions) at 72 and beyond. A QCD is available in an IRA but not in a 401(k).
#2 - ACCESS TO COMPREHENSIVE PLANNING
In the earning years, most investors are primarily interested in growing their assets. As they approach retirement, a whole new set of challenges and opportunities present themselves. Decisions around Social Security, medical planning,