Understanding IRA Rollovers

One of the first financial decisions many people make when they leave an employer is what to do with their retirement account—such as a 401(k), 403(b), 457, or TSP.

A common and often beneficial strategy is to move those funds into a standalone IRA (Individual Retirement Account) through a process known as a rollover.

A rollover is the process of transferring funds from an employer-sponsored retirement plan into an IRA in your own name.

When done properly:

• No taxes are owed at the time of transfer 
• No penalties are incurred 
• The funds continue to grow tax-deferred 

This allows you to maintain the full value of your retirement savings while gaining more control over how those funds are managed.

Once you are no longer working for an employer, it is often not ideal to leave your retirement funds inside the old plan.

By rolling funds into an IRA, you may gain:

• Greater control over your investment choices 
• More flexibility in retirement planning strategies 
• Access to a wider range of options, including income and protection strategies 
• The ability to consolidate multiple accounts into one 

This makes it easier to manage your overall retirement portfolio and align it with your current goals.

Many people assume that rollovers only happen after retirement—but in some cases, moving a portion of funds before retirement can be a strategic decision.

This is especially relevant for individuals who are:

• Within a few years of retiring 
• Concerned about market volatility 
• Looking to reduce risk as they approach their retirement date 

As retirement approaches, your financial priorities often shift from growth to protection.

One of the biggest risks during this phase is experiencing a market downturn just before retirement. A significant loss at this stage can be difficult to recover from because:

• You may no longer be contributing to your accounts 
• You have less time to benefit from a market rebound 
• Withdrawals may begin soon, locking in losses 

By rolling over a portion of your funds into more conservative or protected strategies, you can:

• Reduce overall market exposure 
• Protect a portion of your accumulated savings 
• Create more stability heading into retirement 

It’s important to note that this doesn’t mean moving all assets out of the market. Instead, many retirees benefit from a diversified approach, such as:

• Keeping some assets in the market for continued growth 
• Repositioning a portion into more conservative or protected options 

This balance can help:

• Manage risk 
• Preserve gains from strong market years 
• Provide peace of mind during uncertain market conditions 

• A rollover allows you to move funds from an employer plan to an IRA tax-free and penalty-free 
• Rolling over funds can provide greater control and flexibility 
• You don’t have to wait until retirement—partial rollovers before retirement can be a smart strategy 
• Reducing market exposure before retirement can help protect against downturns at a critical time 
• A diversified strategy is key to long-term success 

Your retirement savings represent years—often decades—of hard work and discipline. As you approach retirement, protecting those assets becomes just as important as growing them.

A well-timed rollover, combined with a thoughtful allocation strategy, can help ensure that your money is positioned to support your goals—both now and throughout your retirement years.