Tuesday, April 1, 2025

The season of spring has finally arrived: flowers are in bloom, days are longer, and it is the best time to clean out the winter dust. While you are cleaning out your wardrobes and mopping the baseboards, have you thought about refreshing your financials as well? April is not just about tax deadlines; it is the right time to review your retirement savings and ask: Is the money making as much money as it should be? For many, the answer lies in a simple yet effective action: an IRA rollover.

Are you one of those people who has an old 401(k) from a previous employer or perhaps a retirement account that has been on automatic pilot for years? At Protection Plus in La Jolla, CA, we offer our clients expert advice and assistance with IRA and 401(k) rollovers to ensure that their savings are protected, taxes are optimized, and growth is maximized. But what exactly is an IRA rollover, why should you care, and when is the right time to do it? Okay, let’s do it the college way: facts, questions, and no filler.

What’s an IRA Rollover, Anyway?

An IRA rollover is a way of moving your retirement savings from one container to another, without losing a single drop. Specifically, it is when you move money from a workplace retirement plan (like a 401(k)) into an Individual Retirement Account (IRA). Why bother? It is possible that the old 401(k) is not doing the best job it could be doing for you. Maybe it is burdened with fees, few investment choices or simply no one has bothered to look at it since you left the company. IRA rollovers give you control, allowing you to decide how to manage your money.

There are two ways to do this: a direct rollover (where the money goes from your 401(k) to an IRA without you having to touch it) or an indirect rollover (where you get a check and you have to deposit it into an IRA within 60 days). The direct route is generally the safest, no taxes, no penalties. The indirect route? Riskier. Fail to deposit it within 60 days, and the IRS may consider it as a withdrawal, which could lead to a tax bill and a 10% penalty if you are under 59½. Yikes.

At Protection Plus, we have seen it all and our clients never get off track. But before we get to how we can assist, let’s discuss why the spring of 2025 could be an excellent time to move that old 401(k) into a shiny new account.

Why Spring Is the Best Time to Do a Rollover

Spring cleaning is not only about your home; it is an attitude. After preparing your taxes (or running to meet the April 15th deadline), you have a good grasp of where your money is. That old 401(k) could be on your list of things to do—perhaps it is included in a statement you have not looked at for months, or it is connected to a former employer. In any case, it is time to wonder: Is this account doing its job? Here’s why spring is the perfect season to do a rollover.

1. Post-Tax Clarity: You have just seen your income, your deductions, and your tax bill for 2024. A rollover can put you in a better position for tax planning in 2025 and future years, for example, to prevent taking taxable distributions in the future.

2. New Year Momentum: April brings the new year’s feeling of freshness and marks the middle of the road to summer. It is a good time to re-evaluate your goals, including those for retirement.

3. Market Timing: The spring season is a time of economic changes; for instance, the Federal Reserve may make announcements or the market may be in a post-earnings season. Transferring now may help you to rearrange your investments for expansion. (Caveat: Markets are always unpredictable but flexibility is a good thing.)

Still not convinced? So let’s get into the real-world advantages of doing an IRA rollover, and why keeping that 401(k) in place may be costing you more than you realize.

The Perks of Rolling Over to an IRA

So imagine you’re 35, two years since you left your last job, and the 401(k) you had sitting there has $50,000 in it. And that money is invested in some generic target date fund with a 0.75% expense ratio and very few investment options — maybe 10 mutual funds. Thirty years later in retirement, that fee alone could suck thousands of dollars in returns. Then picture moving it to an IRA with much lower fees (let’s say 0.25%) and access to stocks, bonds, ETFs or even real estate funds. And that’s the beauty of a rollover. Here’s what you gain:

• Costs are lower. 401(k) plans often have higher administrative and investment costs than IRAs. The Investment Company Institute’s 2023 study revealed that average 401(k) costs fall between 0.5-1%, whereas IRA costs can reach under 0.3% with the right provider. That’s the problem over long periods of time.

• More Choices: IRAs have thousands of funds available to choose from, plus stocks and alternative assets. Stuck in a 401(k)? You have what your ex-employer picked.

• Tax Smarts: A direct rollover does not trigger taxes and penalties and allows your money to continue growing tax-deferred (or tax-free if you have a Roth IRA). IRAs also give you more flexibility in terms of withdrawals.

• Consolidation: So you have several 401(k)s from previous employers? Roll them into one IRA for simplicity. 401(k) rollovers mean less paperwork, less stress.

Meet Sarah, a hypothetical 42-year-old San Diegan. She had $75,000 in a 401(k) from an old marketing gig that had 0.9% in fees. After rolling it over to an IRA with Protection Plus, she dropped her fees to 0.2% and spread her money across growth stocks and saved approximately $15,000 in fees by the time she was 65 (using 6% annual returns). That’s money that’s real for retirement or a dream vacation.

The Risks of Doing Nothing

So rollovers sound fantastic, but is there really any harm in just leaving things as they are? Plenty, actually. And it’s not just sitting there doing nothing; it’s quietly pulling you down. Here’s what you’re risking:

• Fee Drain: Small fees, when compounded over long periods of time, can really add up. A 1% fee on $100,000 over 20 years will cost you $30,000 in lost growth (according to Vanguard’s fee calculator).

• Missed Opportunities: You’ll miss out on market upswings and sectors like tech or clean energy if you don’t have a lot of investment options.

• Forgotten Funds: Life gets busy. And if you lose track of that account, it could end up “orphaned”—or, heaven forbid, escheated to the state if the plan provider can’t find you.

The U.S. Government Accountability Office found in 2022 that millions of Americans leave old 401(k)s behind, often unaware of their options. Don’t let your savings just sit there gathering dust when it could be smarter.

How Do You Know If It’s Time?

Not all 401(k) accounts need a rollover – some employer plans are great, low cost, and good options. So how do you decide? Ask yourself these questions:

1. Are the fees reasonable? Your plan’s expense ratios (check your annual statement or ask HR). If you are paying more than 0.5%, you may be able to save with an IRA.
2. Do I like the investments? If you have limited investment options or want more control over your investments, an IRA is the way to go.
3. Am I changing jobs? A new job is a natural time to transfer the old plan.
4. Is my account small? Some plans charge extra for balances less than $5,000 or force you out of the plan. And that’s where rolling over avoids the problem.

So if you’re nodding “yes” to any of these, then it’s probably worth having a closer look. And here’s the kicker: Rollovers aren’t something that most people should be doing on their own. You’re going to regret it if you cash out rather than transfer. That’s where expertise comes in.

Why Protection Plus Makes It Seamless

Our organization Protection Plus understands the complex nature of retirement income planning because it resembles a confusing maze to many people. The foundation of our reputation rests in our ability to assist clients with stress-free IRA and 401(k) rollovers. The financial company operates directly from La Jolla while functioning as your financial future-building alliance. Here’s how we help:

The process starts with complete documentation support and old plan coordination which prevents 60-day restrictions during direct rollovers.

Our analysis assesses your situation to maximize tax savings during both the present and future periods based on traditional or Roth IRA rollovers.

Our approach to IRA investment selection focuses on your personal financial objectives which can include steady income combined with aggressive growth or a combination of both while using complete wealth protection methods.

Start without any commitment requirements at Protection Plus. Curious? We will examine your former 401(k) without cost to present available options.

Spring 2025 provides you with an opportunity to organize your retirement plan just like you would declutter your garage. An IRA rollover provides you with lower costs along with improved investment options and peace of mind while helping your savings grow in the future. Yet, you never need to solve this challenge by yourself.

Your Next Step:

Reach Out to Protection Plus You are ready to determine if a rollover makes sense for your situation. The team at Protection Plus provides easy and individualized solutions that align with your personal circumstances. Our team remains accessible by phone or in person, so feel free to schedule a complimentary consultation. 

References

1. Investment Company Institute. (2023). The Economics of Providing 401(k) Plans: Services, Fees, and Expenses. https://www.ici.org/
2. Vanguard. (2023). How Fees Affect Your Returns. https://investor.vanguard.com/
3. U.S. Government Accountability Office. (2022). 401(k) Plans: Greater Protections Needed for Forced Transfers and Inactive Accounts. https://www.gao.gov/
4. IRS. (2024). Rollovers of Retirement Plan and IRA Distributions. https://www.irs.gov/