401K

Here we look at the disadvantages and advantages of rolling 401k funds to traditional, Roth and self-directed accounts. Hopefully, the information will help you make the right choice, so that you can retire wealthy at a reasonably young age.

For many years, financial advisors believed that retiring with a million dollars was a good goal. Now, they are suggesting that more will be necessary. Generally speaking, people are living longer, which logically means that they will need more money to live out their lives.

If they want to live out their lives in comfort, if they want to have money to pay for rising healthcare costs, they will need even more. For the last few decades, 401Ks have been the best choice for achieving retirement goals, but for all of the reasons mentioned, thus far, many people are considering the advantages of rolling 401k funds into other approved accounts.

Traditional accounts and 401Ks are so similar that there really is no advantage in converted from one to the other, unless you want to make higher annual contributions. In that case, 401ks have the advantage. Maximum annual contributions to 401ks are twice that of traditional retirement accounts.

Roth accounts are accompanied by numerous benefits, but currently, there are income limits, filing status restrictions and conversion limits. Those will be lifted in 2010.

The advantages of rolling 401k funds to a Roth type account include the following:

• No taxes on qualified distributions

• No requirements concerning when a person must begin taking distributions

There is one disadvantage. All contributions are taxed as regular income. You can either take the tax cut, today or plan for the future. If you hope to retire wealthy, you might prefer to wait for the future benefits.

Then, there are the self-directed accounts.

Anyone that has some investment knowledge and a little time should be using the self-directed approach. People that don’t have the knowledge or the time might still want to consider it.

There are some investment advisors that can help you make more money, even if you have limited experience. It is possible to double, triple or even quadruple your annual contributions, every single year.

Higher returns on your investments are the biggest advantages of rolling 401k funds to self-directed accounts. There are hundreds of success stories. People that had been used to seeing only small annual increases in their account balances, as well as those that had seen losses, due to problematic stocks, have turned things around.

Would you prefer to see a 12% return or a 200% return on your investment? I would be very surprised to hear anyone choose the 12% return.

High returns often mean high risks. But, there are some markets where the risk is low and the returns are high. Real estate is one of them.

Of course, you need to know which real estate investments are most likely to pay off. There are some places “not to buy”.

Now’s the time to learn more about the advantages of rolling 401k funds to self-directed accounts and to learn more about where to buy real estate. Remember, the clock is ticking.

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