“We don’t recommend you ever leave your [401k plan] behind with your former employer or roll it into the new company’s 401k plan.”
— Sr. Precious Metals Advisor Steve Rand

More than half of US workers invest in an employer-based retirement account1 with 401k plans being the most common. Of all 401k benefits, the most compelling is that many employers will match retirement contributions of their employees which is essentially free money.

However, what should you do with your 401k, 403b, 457 plan or TSP after leaving a job?

You’ve worked hard for that money, so you want to make the most of it. Watch The Gold Spot video above to see what IRA Liaison Michelle Ellis and Sr. Precious Metals Advisor Steve Rand have to say about 401k rollovers when leaving a job.

Should I Rollover My 401k to New Employer?

Starting a new job is an equally exciting and stressful time. You have the exhilaration of embarking on a new career, but you also have to worry about making a smooth transfer. One of the most important questions for investors during this transition phase is what to do with a 401k after leaving a job.

You may not want to leave a 401k with an old employer as people have had retirement accounts frozen for extended periods of time without being able to access their funds. However, it may not be the best choice to rollover your current 401k plan to a new employer either. Despite being a common move when transitioning careers, this 401k rollover comes with some investment downsides of its own.

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3 Reasons Why You Shouldn’t Rollover Your 401k to Your New Employer’s Plan

1. You lose control of your plan
There’s a window of opportunity to take full control of your retirement plan when switching jobs. However, that chance is gone when you finalize the 401k rollover to your next employer. Since you’re working hard for the investments and you’ll be the one living off of it, it’s ideal to remain in full control of your retirement funds.

2. You have limited investment options
401k plans are highly restricted in the type of investments they permit. Investors are pretty much stuck with stocks and bonds which are great asset classes when part of a diverse portfolio. However, these limited investment options leave people vulnerable to bouts of inflation and overall market downturns.

Suggested Reading: Traditional IRA vs Gold IRA: Understanding the Differences

3. The company’s performance is a risk factor
Having an employer set up and match contributions to a 401k feels great, but this ties the performance of your retirement fund to a company. If your employer were to go bankrupt or merge with another company, you have less control over what happens to your account. As mentioned before, frozen retirement accounts aren’t unheard of.

Why You Should Consider Rolling Your 401k to a Self-Directed Precious Metals IRA

If you should avoid leaving a 401k behind with an old employer but shouldn’t rollover to a new employer either, what should you do with a retirement account when switching jobs? We suggest transitioning to a self-directed precious metals IRA to take full advantage of the benefits offered by these plans.

Benefits of a Precious Metals IRA:

You’ll have true diversity
Every investor understands the importance of portfolio diversity. The more dynamic your investments, the less risk you have overall. This is especially important in retirement when you’re living off investments and savings. A self-directed precious metals IRA allows investors to invest in physical gold, silver, and other metals for greater diversity.

The fees are transparent
It’s easy for investors to lose track of 401k fees which can add up over time, eating a chunk out of their retirement funds. On the other hand, precious metals IRAs have upfront and transparent fees attached which are lower overall than their 401k counterparts. That means more money in your pocket for retirement.

Your retirement becomes an inflation hedge
Gold, silver, and other metals have been proven to be reliable hedges against inflation unlike stocks, bonds, and other USD-backed assets. With a physical precious metals IRA, you’re gaining protection from market volatility the ability to protect and leverage inflation.

Learn more about the Advantages and Disadvantages of Precious Metals IRA by reading: Gold IRA Pros and Cons

Learn More About a Precious Metals IRA

More and more people are starting to see the benefits of a precious metals IRA in addition to the more common 401k. A self-directed Gold & Silver IRA offers diversity from paper assets, greater protection and more control overall than other retirement accounts. Plus, setting up a precious metals IRA is easier than you might think, especially with guidance and support from an IRA liaison at Scottsdale Bullion & Coin.

Interested in learning more about investing in a precious metals IRA? Watch the video below for a clear explanation of how to rollover your retirement savings into physical gold and silver.