According to 2020 data from the Bureau of Labor Statistics the number of years that wage and salary workers stay with their current employer is 4.1 years. If you do the math that means on average, every worker has 5 different jobs during their lifetime. Unlike our parents or grandparents before us, employees no longer retire from the same company that they started working for. We’re now living in a time where it is not uncommon for someone to have 10 or more jobs during their lifetime.
If you are currently working for a company and plan on leaving at some point in the future, then it’s important that you know what will happen with your 401k account when you leave the company. Every time you change jobs, it’s important to think about what your next move should be with your 401k account.
What is 401k portability?
401k plans are typically portable. This means that most plans allow you (the participant) to roll your 401k into another retirement savings account (such as an IRA or your new employer’s 401k plan) without incurring an early withdrawal penalty. This means that if you leave your job and want to transfer your 401k from one provider to another, then you can do so without having to pay taxes or penalties on what is usually considered “cash out of pocket.”
If you leave a job for another company, the new company may have a provision in which you can “roll” your old 401k into the new company plan. The new plan may have restrictions on how you can invest your money since it will have its own plan investment options. In order to roll over your 401k into another account, the provider may charge a fee for this service. You will need to check with your new company’s Human Resource (HR) department for more details.
However, there may be better options for you regarding your old 401k. One option may be to rollover your account into a self directed IRA. A self-directed IRA is a retirement account that allows you to invest in the portfolio of your choosing. The only restriction is that you must use a custodian who will hold your assets.
What is a rollover IRA?
A rollover IRA is a traditional IRA or Roth IRA that you can use to move funds from your previous company into your own personal account. When you do this, the money will be transferred directly from your employer’s plan administrator to the custodian of your choice.
What are the different types of IRAs?
Traditional IRAs are tax-deferred accounts that allow you to put money away for retirement. You may be eligible for a tax deduction on your contributions if you qualify as a “traditional” or “regular” employee. The money grows tax free in the account until withdrawn at retirement, when all withdrawals will be taxed as income.
A Roth IRA is a retirement account that allows you to put money away for retirement. The contributions you make to a Roth IRA aren’t tax-deductible (and they don’t show up on your annual tax return), but qualified distributions or distributions that are made up of previously taxed money aren’t subject to income taxes. To qualify as a Roth IRA, the account must be designated as one when it’s set up.
Cashing out of your 401k could be costly
When leaving your employer, you may decide to “cash out” of your 401k. This could be a costly mistake since the employer will withhold 20% to prepay the tax you will owe. If you are under the age of 59½, you will also be subject to an additional 10% penalty.
Please note that your previous employer’s 401k plan might not allow you to keep money in the account once you have left the company.
Financial advice and guidance
Investors who do it alone and try to manage their own investment account often do this at their own peril. Due to the constant noise and bantering of Wall Street pundits and so called experts, investors follow the noise only to be met with low returns and frustration.
A few months back, we referenced a study by the research firm DALBAR which looked at individual investor performance compared to a broad market index. Individual investors left on their own typically sell when prices are low and buy when prices are high. Their underperformance is behaviorally driven and is lacking in a plan or roadmap regarding their financial future.
Any investor who chooses to roll over their monies should consider hiring a financial planner who can create a prudent investment strategy. They can create a diversified, well-balanced portfolio that will meet your financial goals and align with a financial roadmap giving you the highest probability of investment success.
The bottom line is that if you don’t have a financial plan, then you won’t know where you are going or how long it will take to get there. You also won’t know how much money you need or what investments are best for your situation.
So, there you have it: rolling out of your old 401k plan can potentially be a great idea if you’re looking to diversify, lower investment costs, and get the input and advice from a financial planner.
Of course, investing isn’t about guessing when the market will go up or down; it’s about creating a diversified portfolio made up of various asset classes that follow the entire global market. It’s important to remember that an investment strategy only makes sense in the context of a detailed financial plan.
Have a great weekend!
Source: Bureau of Labor Statistics and IRS.gov
Golf Tip of the Week
Bad At Reading Greens? Try This Legendary Putter’s 5-Step Fix
It’s quite fascinating that the most important part of good putting might not even be physical. Sure, it’s important that you start your ball on your intended line, which rests on certain technical elements. But the real separator between good and bad putters comes in their judgement: their ability to read greens and to estimate the speed needed to hit the putt.
Dave Stockton, who won the 1970 and 1976 PGA Championships, is regarded as one of the best putters of all time. He recently created an interesting Golf Digest Schools series where he talked through some of his keys for golfers looking to improve their green-reading skills. It’s the kind of bedrock quality that will help you become a better putter, so let’s dive in.
1- Take in your surroundings
The first step of your green reading starts as you’re walking up towards the green. Take in your surroundings, Stockton says, and get an idea of the undulations within the green.
“You’ll feel it with your feet, what the green is doing,” Stockton says. “There’s something to be said for walking up, thinking of where the water is going to drain, the slopes … you’re learning things.
But specifically, start hunting for the lowest point around the hole, he says. It’s going to come in handy for what’s next…
2- Read the putt from the low side
When you first get to the green and are trying to figure out which direction your golf ball is going to move, Stockton says to start by standing in the lowest point of the hole. Stockton explains that it’s from this vantage point you’ll be able to see the more intricate details of the putt you’re about to roll.
“I will always start at the low side of the putt, never on the high side,” he says. “It’s like reading a book. You don’t tilt the book away from you, you tilt it towards you.
“Standing on the low side will give you an entire good look at the entire break of the putt.”
3- Divide the putt into thirds
Now that you’ve taken-in your larger surroundings and sized-up the putt from the low side of the hole, take a look at your putt from behind the ball. Then, divide it into three different parts.
“I break every putt into thirds,” Stockton says, pointing at a six-foot putt. “For this putt, that means three two foot putts.”
After you do that, read each section of the putt like it was its own putt. So, the first section may break an inch from right-to-left, while the second section may be straight, before the third section breaks three more inches from right-to-left.
By breaking the putt into its component parts, Stockton explains, you’ll be able to focus specifically on each area of the putt. It’ll simplify things, and yet you’ll still walk away with a more detailed read.
4- Find the ‘new’ center of the hole
Now that you’ve got a good handle on how your putt is going to break, before you fully settle into it, Stockton recommends standing behind the hole, directly in line with your ball.
Your goal for doing this, Stockton says, is to find the new center of the hole. If your putt is going to break from right-to-left, the center of the hole is going to be more on the right side of the hole.
“I’m trying to pick a spot where the ball is going to enter the hole,” he says.
Stockton suggests practicing this by placing a tee in the new center of the hole, and one about a foot past the hole, in line with the first tee. The will help you conceptualize how the putt is going to travel before, during, and after the hole.
“This is where I want the ball to enter the hole, and I don’t want the ball to roll past [the second tee] if it doesn’t,” he finishes.
5- Focus one inch in front of your ball
Now that you understand the green, the putt itself, and how it’s going to arc into the hole, it’s time to step into your putt. Stockton says to stand directly behind your ball and walk into your putt looking at a spot once inch in front of your golf ball.
“We’re trying to create a process where we don’t get many red lights,” he says. “I’m locked in.”
It’ll focus your mind, but also, will give you feedback about whether you hit the putt on the line you intended to or not. If your ball rolls directly over that spot on the line you’ve picked, that’s all that matters. It may not end up in the hole, but you can take solace that you’ve given it your best chance.
Tip adapted from golfdigest.comi
Recipe of the Week
Baked Macaroni And Cheese
- 1/2 pound elbow macaroni
- 3 tablespoons butter
- 3 tablespoons flour
- 1 tablespoon powdered mustard
- 3 cups milk
- 1/2 cup yellow onion, finely diced
- 1 bay leaf
- 1/2 teaspoon paprika
- 1 large egg
- 12 ounces sharp cheddar, shredded
- 1 teaspoon kosher salt
- Fresh black pepper
- 3 tablespoons butter
- 1 cup panko breadcrumbs
- Preheat oven to 350 degrees F.
- In a large pot of boiling, salted water cook the pasta to al dente.
- While the pasta is cooking, in a separate pot, melt the butter. Whisk in the flour and mustard and keep it moving for about five minutes. Make sure it’s free of lumps. Stir in the milk, onion, bay leaf, and paprika. Simmer for ten minutes and remove the bay leaf.
- Temper in the egg. Stir in 3/4 of the cheese. Season with salt and pepper. Fold the macaroni into the mix and pour into a 2-quart casserole dish. Top with remaining cheese.
- Melt the butter in a sauté pan and toss the breadcrumbs to coat. Top the macaroni with the breadcrumbs. Bake for 30 minutes. Remove from oven and rest for five minutes before serving.
- Remember to save leftovers for fried Macaroni and Cheese.
Recipe adapted from foodnetwork.comii
Health Tip of the Week
Foods That Boost Your Energy
Doesn’t All Food Boost Energy?
Yes, but in different ways. Sugary drinks, candy, and pastries put too much fuel (sugar) into your blood too quickly. The ensuing crash leaves you tired and hungry again. “Complex carbs,” healthy fats, and protein take longer to digest, satisfy your hunger, and provide a slow, steady stream of energy.
It’s a complex carbohydrate. That means it’s full of fiber and nutrients. Oatmeal is slower to digest and supplies energy evenly instead of all at once, and it is whole grain and gluten-free. A bowl in the morning will keep you going for hours.
A single one has just 70 calories, and yet has 6 grams of protein. That provides fuel that gets released slowly. It also has more nutrients per calorie than most other foods. That helps it satisfy hunger. As a result, you’re more likely to skip that mid-morning doughnut in the office break room that will spike your blood sugar and crash your energy.
Trimmed of skin, it’s a great source of lean protein. A piece of grilled chicken with some steamed or lightly dressed greens makes a perfect light lunch that won’t weigh you down and will fuel you steadily until dinner. And chicken has less of that unhealthy saturated fat than other meats like pork, beef, and lamb.
Without enough vitamin B12, your energy can lag. This is one of the best sources. It also has loads of protein to keep you fueled for a long time. If you just can’t do liver, you can get your B12 from meat, poultry, fish, and eggs.
Besides being a good source of low-fat protein, they’re loaded with zinc. That helps your body fight off germs that could run you down and make you feel tired. Try them raw with a squeeze of lemon when they’re in season, or roast them in the oven or on the grill.
They’re a great source of protein, especially if you’re vegetarian or vegan. Beans also have plenty of fiber to help slow digestion. They’re rich in magnesium, too. That helps your cells make energy.
They’re not for everyone, but sardines do provide high-quality animal protein for steady energy. They also have loads of omega-3 “marine” fatty acids (EPA and DHA) that help prevent heart disease. If they’re just too fishy for you, try salmon, tuna, or mackerel.
It’s those omega-3s again. Walnuts have one in particular that your body uses for energy (alpha-linolenic acid). Though nuts are high in calories, studies show that people who eat them don’t gain weight or have other signs of bad health from them. That could be because the fiber slows how your body takes them in and the “healthy” fats satisfy hunger.
It’s where many of us get our morning caffeine jolt. And it works. It boosts your energy and keeps you more alert. Just don’t overdo it. Caffeine can make you jittery and interfere with your sleep if you have too much, you’re not used to it, or you have it late in the day.
A simple cup of tea is a low-calorie way to replace sugary sodas and soft drinks that can spike and then crash your energy levels in the middle of the day. That switch makes you more likely to get the nutrients and fluids you need each day, which can help keep you alert and energized. Some teas have caffeine that can give you a little boost, too.
Blueberries, blackberries, strawberries: They’re perfect if you want something sweet that doesn’t have the calorie blast and “sugar crash” of a doughnut or candy bar. Berries also have antioxidants and other nutrients that help nourish and protect cells all over your body.
If you just have to have candy, this is a good choice. It’s lower in sugar than candy bars and milk chocolate. It’s also been shown to improve mood and brain function. Antioxidants in the cocoa can help protect cells, lower blood pressure, and improve blood flow. This can keep you healthy and energized. Dark chocolate does have fat, so check the label and keep portions small.
When your body doesn’t have enough, you get tired. It also helps carry fuel and nutrients to your cells and helps get rid of waste. People who drink more of it usually take in less fat, sugar, salt, cholesterol, and total calories. That leaves more room for healthy nutrients that keep you energized. It’s especially important to drink up when you exercise. Have 8 ounces before and after your workouts — more if your circuit is longer than 30 minutes.
Foods for Exercise
The best fuel for exercise is carbohydrates, preferably “complex” ones like fruits, vegetables, and whole grains. Healthy fats from fish, nuts, vegetable oils, and avocados can help fuel endurance sports like long-distance running. Protein can help boost an immune system worn down by exercise. It can also repair muscle that tears naturally when you strengthen it, like when you lift weights, for example.
Tip adapted from webmd.comiii
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