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5 things to know about retirement plan rollovers

The key question one faces after retirement is the determination of whether or not funds should be moved from an ERISA-governed plan to an IRA.

By Stephan R. Leimberg, Ben G. Baldwin Jr., Aaron Coates, Robert S. Keebler, Michael E. Kitces | Updated on April 21, 2014

As people retire, they will often have a choice of leaving funds with their previous employer or rolling over the funds to an individual retirement account (IRA). An IRA is somewhat like a pension or profit sharing plan, in that it allows the funds to be held tax-deferred until later withdrawn. Although there are differences, in general, from a distribution perspective, IRAs and profit sharing plans share many commonalities. From an asset protection standpoint, however, ERISA plans (i.e., profit sharing and pension plans) generally provide enhanced asset protection. (discussed below)

The key question one faces after retirement is the determination of whether or not funds should be moved from an ERISA-governed plan to an IRA. The primary answer to this question will be based on asset protection, while the secondary answer will largely be governed by federal tax law.

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