As we begin March, I’m sure that you, like me, are ready for the cold weather to depart.  Excluding the Floridians & Californians, probably the rest of us are ready for sunshine and the transition to spring.  I’m looking forward to working in my yard and bringing the flower beds back to life.  As we anticipate the transition to our next season, I was thinking about how we transition from one stage of life to another at various times throughout our lives.

Recently, I have been working with a client discussing and evaluating one of these transition times for many of us in regard to our retirement planning.  The top of mind topic for these members was the In-Service Rollover (or ISR).  Many people are not aware that once you reach the age of 59 ½, you have the ability to transfer a portion of your retirement plan assets (401k, 403b or similar retirement plan vehicle) into a self-directed IRA.  This transfer can be completed while you are still working for your employer and while you continue to participate in your employer provided retirement plan.  Each retirement plan has specific rules and processes but typically, this transfer can be up to 80% of your 401k balance.


There are many advantages to taking this opportunity and completing an ISR once you reach the age of 59 ½.  Below are some of the most common:

  1. Better Control & Flexibility of Your Retirement Assets

-you will have greater control of your assets in an IRA and not be limited by the rules of your employer’s plan.  You will also have the flexibility of deciding which custodian will hold your assets.  Typical custodians are brokerage houses (Fidelity, Charles Schwab, etc), banks or any provider of individual retirement accounts.  Your employer has a responsibility to provide a retirement plan for all participants, while your IRA account can   be customized for your specific needs.

  1. Better Investment Choices

-you will not be limited to the investment choices provided by your employer’s 401k plan.   Rollover IRA’s have access to a much larger universe of investment options; which include individual stocks, bonds, exchange traded funds (ETF’s), separately managed accounts, as well as a much wider array of mutual fund options. You will not be limited strictly to the investment choices your employer has chosen for you within the constraints of the retirement plan.

  1. Reduced Costs

-you will have the ability to select investment choices that typically have lower internal costs than the choices   provided in the employer’s retirement plan.  Typically, the total costs to the participant in the employer’s plan are difficult to determine; however, most often cost savings can be realized by using alternative investment options.  These costs are imbedded into the operations of the investment choices which are not directly paid by the participant; however, they reduce the performance or growth of the investments.

  1. Simplification of Service – “Minimize having to deal with the Custodian”

-many retirement plan participants are frustrated by having to deal with the custodian of the 401k plan they participate in.  These frustrations materialize with service issues in regard to changing investment choices, passwords for online login and reporting issues to determine how the assets have performed.  Many of the 401k plan custodians have made it difficult to get any form of service from them.

  1. Ability to Hire & Pay for Professional Management

-you have the ability to hire a professional advisor to help you with your investment selections and to add risk controls to your portfolio.  As we know with today’s investment environment, sometimes a buy and hold strategy may not be the best course of action for all investors.  In addition to having access to an advisor, you will have the ability to pay that advisor from your IRA rollover assets.  This is a direct payment of management fees from your account with PRE-TAX dollars.  This eliminates the need to write checks or provide credit cards for investment management services, along with making it easier to access your retirement assets for payment of these services.

Once you have decided that an In-Service Rollover might be of interest to you, there are three simple steps to taking control of your retirement assets and gaining access to some or all of the benefits highlighted above.  Those three steps are:

  1. Determine your eligibility for an ISR and the amount your Company’s plan allows you to roll into your self-directed IRA account. You will most likely do a direct rollover of these amounts and all plans have procedures for doing so.
  2. Set up an Individual Retirement Account (IRA) with a custodian to rollover your assets.
  3. Request and complete the rollover distribution paperwork as required by your employer’s retirement plan administrator.

As mentioned above, taking advantage of your In-Service Rollover opportunity and moving a portion of your retirement assets from your existing retirement plan to an IRA account, controlled by you, can have many advantages.  This opportunity is one of the times of transition that we all have as we move toward and plan for our retirement.

If you have questions about the process or would like to get additional details, schedule a free phone consultation with our In-Service Rollover specialist.