Why roll over your 401(k) into an IRA

When it comes to regulatory restrictions, the US financial authorities are among the strictest in the world. If you are a US citizen or you are a Green Card holder with a pension fund in the US but living abroad, you might have experienced difficulties in managing your hard-earned money such as your 401k as your options are limited due to regulations.

There are solutions that would help you take control of your funds and save you money on unnecessary fees. With the right financial advice from qualified advisers, you can enjoy the benefits of having a solid financial plan to accommodate your retirement needs.

In this article, we suggest a way to make the most out of your 401k plan by rolling it into an Individual Retirement Account (IRA).

US expats face financial challenges

As an American living overseas, you have probably experienced first-hand problems such as difficulty opening bank accounts, closure of brokerage accounts and a lack of quality investment options. What’s more, is that some financial advisers aren’t qualified or lack the necessary knowledge and skills to offer American clients a range of suitable options.

The IRS and the Foreign Account Tax Compliance Act (FATCA) have a negative impact on the plans of Americans who work or reside overseas.

What is an Individual Retirement Account?

An Individual Retirement Account or IRA allows an individual to plan and save money for retirement in a tax-advantaged way. Depending on the IRA type (Traditional or Roth) contributions may be tax-deductible or not.

Why rollover your 401k into an Individual Retirement Account (IRA)?

Your 401k plan is a type of a defined contribution pension plan which has many limitations if you are looking to take advantage of your funds. The small sample of available investment options and the complicated tax rules imposed on them, force many cross-border professionals to let their 401k plans unattended.

However, our team of experts could help you determine if an IRA platform would be the right option for you.

rolling over a 401k plan into an IRA

A broad range of investment options

An IRA helps you get access to a wide range of investment options that wouldn’t be available via a 401k plan. Therefore, you would be able to design a comprehensive plan for your retirement savings.

Withdrawal flexibility

With an IRA you are able to manage your withdrawals and taxes paid on them while you decide which assets to liquidate to help you achieve your goals.

Taking control of your funds

Having an IRA allows you to be agile in case one of the funds doesn’t perform well or according to your plans. With an IRA you can choose to be flexible and make swift and optimal choices.

Estate planning advantages

An IRA gives you the chance to create the estate plan you want as it allows you to name multiple beneficiaries if the unthinkable happens.

Fewer restrictions than in a 401k

Many people who lack financial knowledge find it difficult to understand how a 401k plan works. IRAs are more simple and are standardised by the IRS.

Who should be interested in an IRA?

There are many types of individuals that could benefit from a comprehensive plan, prepared by fully qualified advisers with many years of experience in the US regulated financial market.


· US citizens living overseas
· US Green Card holders
· Children of US citizens born or living abroad

Lump-sum investments for US citizens in Europe or outside of the US

Our team at Holborn Assets is able to assist US citizens that live in Europe or outside of the US in making lump sum investments that suit their financial plans in a tax-efficient manner. Our advisers with many years of experience in the global financial market can advise you on making the right investment choice which would ensure that you and your loved ones have the quality of life they deserve.


Here are some of the benefits of lump-sum investing for US citizens in Europe with Holborn:

Capital appreciation and resilience

Lump-sum investments are mostly long-term investments, ideal for people who want to plan ahead. Therefore, these investments are more resilient during market fluctuations.

Low charges

Lump-sum investments are one-off which means that they incur low charges when compared to smaller periodical investments.

Reduced taxation

We can advise you on selecting a lump sum investment plan that would remove the PFIC (Passive Foreign Income) taxation which is a heavy burden for every US investor. Tax reporting could also become simpler for you.

Access to investments in the US

Our advisers can help you choose the right investment solution that would give you access to the US domestic investment market if you require it. This means more freedom for you and more options to diversify your investment portfolio.

Invest with Holborn

Holding your money in a savings account isn’t the best option in the long term as inflation and low-interest rates weigh on purchasing power. In some cases, the return from depositing money in such accounts may be below inflation.

Our experienced team tailors your investment portfolio to suit your individual circumstances and financial goals in a tax-efficient manner. Get in touch with us today to learn more and start designing the financial plan you want for you and your family.

 

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