Most people wait until they retire to roll their money from a qualified plan, such as a 401(k), and then proceed to work with us on a retirement plan.? But with an in-service withdrawal and by your working with us before you retire, we can add a lot more value for folks.
How does it work?
First, we can start the planning process before you actually make the decision to retire. ? We can help you groom your finances over the last portion of your employment years so as to make sure you are fully prepared prior to retiring.
Second, through an in-service rollover with us, we have options that may simply not be available in your current qualified plan with your employer.? (Keep in mind that whether or not an in-service withdrawal is available for you or not depends on the employer-specific options which are outlined in your qualified plan document.)
By definition, an ?in-service withdrawal? is a withdrawal made from a qualified plan account before the holder experiences a triggering event, such as reaching a certain age or leaving an employer.
Why is it important?
Even though your 401(k) may be invested through a fine company, that company may not have ?protection type?
investments that we have available for you in accounts with our custodian, Charles Schwab & Co., Inc.
For example, we have worked with retirees from Union Pacific for years.? The 401(k) at Union Pacific does not provide options for investing in Commodities such as precious metals; Real Estate Funds that are conservative and focus on cash flow; or Oil and Gas or Natural Resources funds, etc. ?Furthermore, all there is available in that same 401(k) plan for fixed income is the Total Bond Fund ? rather than inflation-indexed bonds, flexible bond funds, foreign bond funds that protect against the declining U.S. dollar, or preferred securities funds.? From my perspective?regarding fixed income investing, bonds may currently be in a bubble and we need to be cautious.
Furthermore, given our government?s approach?regarding our massive federal debt, we are on a dangerous path that could end up with devastating inflation.? This is why I believe?it is so vital for one?s portfolio to have commodities and other inflation-protected assets as well ? rather than strictly bond funds.
What can you do?
The in-service withdrawal is not available for everyone.? However, if it is available for you or someone you know, here are some actions to take.
You can help us to get in touch with folks about these investment techniques.? We can begin the financial planning process, then explain what types of investment alternatives are available in a Schwab IRA account.? Give us a call at 712-256-4856 with your questions or contact information.
Remember, our mission is to assist people in turning their retirement dreams into reality through proven, time-tested investment solutions.
Ron Dickinson, CFP?,CPA, MPA-Tax
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