As an employee of AutoNation, you have saved for retirement through the company defined contribution 401 (K) plan. AutoNation, a great company to work for, has helped you save for retirement by matching contributions and offering a variety of investment option for your money. Under a defined-contribution plan, the payout at retirement is not fixed, as it was under the Defined Benefit plans of old. The amount that you receive depends on the contributions you and AutoNation made and the returns earned from the investment.
As much as you have loved working for AutoNation, it is now your choice to retire. You are looking forward to a carefree lifestyle with no worries. The ability to enjoy your retirement will depend on what you do with your AutoNation 401 (K) funds. As much as you trusted and benefitted from the AutoNation investment funds, it is wise to roll over your 401 (K) funds into an IRA. The reasons to make this move are numerous. Read on to see why rolling over your AutoNation 401 (K) is right for you.
Most 401 (K) plans provide access to a broad array of mutual funds and sometimes individual securities through a brokerage window, for an addition charge. Administering the funds assets is costly. Employers often pay the fees as part of a benefits package or they might charge reasonable fees as permitted by ERISA. Other plans offer free administrative services. However, they charge for the investment product offered. Additionally, plans charge for pooled investment accounts and mutual funds offered in 401 (K) accounts. This usually equals a percentage of the total assets invested based on the type of investment, aka revenue sharing.
Employees must navigate through the portfolio and make choices for their retirement goals while being concerned with the differential costs of options in the menu. Many authorities have called for greater regulation of excessive fees charged by retirement plans. As quoted in the March 2015 edition of the Yale Law Journal, “The issue is that these plans invest in actively managed mutual funds that siphon off tens of billions of dollars in fees every year, yet they deliver returns that trail the overall market. While persistent over-performance is rare and difficult to predict, fees are relatively transparent and tend to persist.”
In addition to controlling the fees that you pay, you can minimize the restrictions of what you can invest in by rolling over your retirement account. Most 401 (K) plans have investment restrictions including restricting the employer contribution portion to the funds of their choice. The funds of their choosing can also include investing in the company stock. We all know that keeping your eggs in one basket is a recipe for breakfast not for prudent investing. Even if all the options in the company fund menu involved no fees, a limited choice of mutual funds would prevent you from selecting resources that reflect your risk tolerance and investment goals. Once you roll over your 401 (K), you will have complete control over investing your money.
If your AutoNation 401 (K) is not your only retirement fund, then it makes sense to consolidate your accounts. Whether the accounts are from several or one other employer tracking them is a nuisance. The benefit of combining accounts is that you will get a complete picture of your investments. It is more convenient to deal with one institution that offers excellent service, low fees, and investment choice. Consolidating 401 (K)s help to establish a strategy based on your current needs, goals and on today’s market. Additionally, regardless of the size of the old fund choices, most likely it is dwarfed by choices available when you roll over to an IRA. Rather than being stuck in the past views of your employer, you can chart your investment course. Do not neglect the wealth you have worked so hard to build with unsuitable investments based on past trends. Instead, reach out to your professional investment advisor to find the investment approach that will be as successful as you have been in all your professional endeavors.
“S.A.C. Investments is an independent investment management firm built on the belief that all investors should have access to unbiased, professional advice provided through a client-first relationship. We are committed to doing our job diligently so you can have the freedom to focus on your ambitions for a good life, now and in the future.” To find out more contact us today.