401K vs IRA

[PatrickA5]

What are the advantages/disadvantages of rolling over an IRA into my current companys 401K plan? For the sake of simplicity, let's just assume all funds and fees are equal in both plans. Is there an advantage of one over the other? Thanks!

[MasterBlaster]

Some advantages of IRA over 401k

1. More investment choices
2. Usually a longer payout option for beneficiaries.
3. You have control of assets. No need to worry about "orphaned" plan due to lack of trustee.
4. More flexibility in naming beneficiaries, esp. where original participant is deceased.

Advantages of 401k over IRA

1. Participants usually are allowed to take loans from qualified plans--can't with IRAs.
2. QPs are protected from creditors under ERISA. IRAs are covered by state law in this regard.
3. Lower retirement age to access funds without penalty (55 v. 59 1/2)
4. 401k may be getting lower expenses on identical mutual funds (institutional rate v. individual rate)
5. A mutual fund in a QP may be available for new investment, even though it is closed to new individual investors.

[PatrickA5]

Thanks for the reply - that helps.

I'm currently 49 and will retire sometime between the age of 55 and 62. I'm just trying to figue out what gives me the most penalty-free flexibility before age 59 1/2. It sounds like as long as you wait until you're 55 to retire the 401K would give you more withdrawal flexibility than an IRA would. Am I right in saying that I can take out "any" amount out of a 401K at 55 whereas, with an IRA I would have to do some kind of equal lifetime withdrawals to avoid the penalty?

[renferme]

Quote:

Originally Posted by PatrickA5 Thanks for the reply - that helps. Am I right in saying that I can take out "any" amount out of a 401K at 55 whereas, with an IRA I would have to do some kind of equal lifetime withdrawals to avoid the penalty?

"any" amount as long as it's an equal periodic withdrawal.