Rolling your money to an IRA allows your assets to continue their tax-advantaged status and growth potential, the same as in your employer's plan. In addition, an IRA often gives you access to more investment options than are typically available in a QRP and investment advice. An IRA lets you decide how you want to manage your investments, whether that's using an online account with which you can choose investments on your own or working with a professional who can help you choose investments.
Features
- Investments retain tax-advantaged growth potential.
- Access to more investment choices, which provide greater potential diversification.
- Ability to maintain your retirement savings along with your other financial accounts.
- Additional contributions are allowed, if eligible.
- Additional exceptions to the IRS 10% additional tax for a early or pre-59½ distributions (10% additional tax) including for higher education and first time homebuyer.
- Traditional and Roth IRA contributions and earnings are protected from creditors in federal bankruptcy proceedings to a maximum limit of $1,512,350, adjusted periodically for inflation.
- Rollovers from QRPs, SEP, and SIMPLE IRAs have no maximum limit for federal bankruptcy protection.
Keep in mind
- IRA fees and expenses are generally higher than those in your QRP and depend primarily on your investment choices.
- Required minimum distributions (RMDs) begin April 1 following the year you reach 73, and annually thereafter. The aggregated amount of your RMDs can be taken from any of your Traditional, SEP, or SIMPLE IRAs. Roth IRA owners have no RMDs.
- IRAs are subject to state creditor laws regarding malpractice, divorce, creditors outside of bankruptcy, or other types of lawsuits.
- If you own appreciated employer securities, favorable tax treatment of net unrealized appreciation (NUA) is lost if rolled into an IRA.
- In addition to ordinary income tax, distributions prior to age 59½ may be subject to a 10% additional tax.
Wells Fargo offers IRAs along with a variety of ways to manage your savings. Learn more about our options.
Note: If you choose this option, you’ll want to research the difference between a Traditional and Roth IRA and where you would like to open an IRA, start the process of moving your savings over to your IRA, periodically review your investments, and take RMDs (once you reach RMD age).