Should You Roll Over Your Retirement Plan When You Retire?
Here are some pros and cons of leaving your money in the company retirement plan when you retire vs. rolling it over to an IRA.


When a person retires with a company retirement plan, it’s important to know the pros and cons of rolling over to an IRA vs. leaving your money in the plan. And you won’t come up with the same answer for everyone.
For example, if you retire between the ages of 55 and 59½, and you need to take money out of your retirement plan to pay off your mortgage, in most cases it would be far better to leave your money in the company plan, at least until you take this withdrawal. This is because you can pull the money out without a 10% penalty, unlike with an IRA.
Or, if you plan on getting new employment, you may want to leave the money in the company plan so you can roll it over to the new employer’s plan. In most cases, this would allow you to delay taking required minimum distributions (RMDs) at age 73 because you’re still working.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Also, if you have access to good investment advice through your company plan or make your own investment decisions, generally the fees on the investments are going to be lower than buying the same type of investments in an IRA through a financial adviser.
When leaving your money in the company plan makes sense
Company plan assets also receive federal creditor protection, whereas state law protects IRAs, with some states offering little or no creditor protection against things like lawsuits, divorce and other creditor problems. If your state is weak on creditor protection and you have legal or creditor problems, you may be better off leaving your money in the company plan.
On the other hand, doing a rollover to an IRA would allow you to have a much broader choice of investment options to choose from rather than being stuck with a limited number of investments offered by a typical company plan.
And in most cases, former employees generally receive far better service and more professional advice from financial advisers compared to some inexperienced phone representative where the company plan has been outsourced to a third party.
For the charity-minded, a qualified charitable distribution (QCD) is a way to take part of your RMD tax-free if you’re giving the funds to charity.
Remember, if you don’t itemize, your charitable giving is no longer deductible, but the QCD creates the same end result even if you don’t itemize. This powerful tax advantage can be made only from an IRA, so it’s lost if the funds remain in your company plan.
IRAs handy for combining different retirement accounts
The IRA is also a handy place to consolidate and simplify all the different retirement accounts into one IRA or perhaps one IRA and one Roth IRA.
This is a huge advantage in a situation where you’re having to keep track of several retirement plans, along with the beneficiary withdrawal options on each plan, the statements for each plan, the passwords for each plan and so on.
Lastly, with company plans, in most cases, employees have to take their RMD from each plan separately, whereas IRAs can be consolidated for calculating RMDs, which can really help simplify the process. For example, IRA owners can take their RMD for all of their IRAs from just one of several IRAs.
So if you’re in the valley of decision on whether or not to roll your company plan over to an IRA, start by reviewing this list of pros and cons, and then perhaps talk with a professional financial adviser, who can help you to make a decision based on what works best for you.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
-
Berkshire Hathaway's in the 100,000% Return Club. No Surprise Here
Warren Buffett's fascination with the insurance industry has helped Berkshire Hathaway's stock return snowball.
By Louis Navellier Published
-
4 Turnaround Stocks to Consider – and 2 More to Keep an Eye On
A turnaround stock is a struggling company with a strong makeover plan that can pay off for intrepid investors.
By Nellie S. Huang Published
-
Facing a Layoff? Ask Your Employer These Questions Now
If you're being laid off or forced into early retirement, don't make any decisions without proper guidance — and that starts by asking some key questions.
By Ben Maxwell, ChFC®, AAMS® Published
-
Have $1M+ Saved? Consider a Financial Planning One-Stop Shop
A 'one-stop shop' team — including a financial planner, estate planning lawyer, CPA and more — could serve all of your tax, estate and retirement planning needs.
By Joe F. Schmitz Jr., CFP®, ChFC® Published
-
Five Ways to Safeguard Your Portfolio in Market Downturns
The stock market is nothing if not volatile these days. When it takes a dip, a well-managed, properly diversified portfolio could help you ride out the storm.
By Joel V. Russo, LUTCF Published
-
This Underused IRA Option Offers Tax Benefits and Income Security
Looking to avoid running out of money in retirement? Consider longevity protection provided by a QLAC as a component of your retirement income plan.
By Jerry Golden, Investment Adviser Representative Published
-
These Four Books Explore How to Leverage Our Outrage Positively
The authors offer some powerful tools to help us find solutions to discord rather than remaining silent or blowing up in anger.
By H. Dennis Beaver, Esq. Published
-
Financial Pitfalls to Avoid in Your 30s, 40s and 50s
As you pass through each decade of working life and build wealth for retirement, watch out for the financial traps that can hinder your progress.
By Julia Pham, CFP®, AIF®, CDFA® Published
-
Five Key Retirement Challenges (and How to Face Them Head On)
Life will inevitably throw challenges at you as you get older. But making a flexible retirement plan — and monitoring it regularly — can help you overcome them.
By Walt West Published
-
Four Action Items for Federal Employees With $2M+ Saved
If you can't stand the chaos, maybe you can walk off into the sunset of retirement. Here are some thoughts on how to figure out if that would work for you.
By Evan T. Beach, CFP®, AWMA® Published