Question: I'm retired (age 62 and married) and have most of my money in deferred compensation plans, 401(k) and 457. Is there any reason or advantage to roll them over to an IRA? Is it okay to leave them in the plans themselves?F. P.

Answer: That is an excellent question. There are several benefits to rolling your employer deferred compensation plans to a self directed Traditional IRA. You are typically able to leave the funds with the current plans, but this would depend on the actual rules of the plan. Some plans may require a former employee to rollover the account within a certain number of years, or if it is below a certain balance. Your former employers can provide you with further information regarding the specific rules of the plans you are participating in.

One of the primary benefits would be that rolling the funds to a Traditional IRA would most likely offer you a broader selection of investment options. In particular, IRAs allow you to invest in most types of investments, including individual stocks, bonds or mutual funds.You would also benefit from the ability to consolidate your accounts, making it easier to manage your investment accounts going forward.

There are some hardship withdrawal provisions that may be available in 401(k) plans and not IRAs. Regardless of age, there is not an early withdrawal penalty from a 457 plan. This would not affect you based on your age, but again, for others, this may be a a factor in deciding whether to keep the funds in the plan or moving them to an IRA.

When initiating these rollovers, be sure to elect a trustee to trustee transfer over a direct distribution. This will save you some headache related to required tax withholding and providing proof to the IRS that you did in fact roll the distribution into an IRA. Also be sure to compare the costs, services, investment choices, and distribution options and check if you are subject to any surrender fees or contingent deferred sales charges.

I hope that this has been helpful information. Please do not hesitate to submit any follow up questions that you may have.

Crystal L. Billing, M.B.A., CFP®

Financial Planning Association volunteer recommendations are for informational and educational purposes only. Please consult with your financial planner, CPA, or attorney before taking action based on this information. The Financial Planning Association or the volunteers will not be held responsible for any action taken or mistakes posted.