Lockheed Martin has one of the most generous 401(k) plans out there. In fact, it’s so great that you can utilize both a 401(k) and an IRA at the same time! In order to do so, the process is called an in-service rollover. This allows for funds in your 401(k) to be rolled into a traditional IRA.

Here is a quick reminder of the characteristics between a 401(k) and an IRA:

Characteristic 401(k) Traditional IRA
Employer-sponsored Yes No
Tax-deferral Yes Yes
Age limit to contribute No No
Employer contributions allowed Yes No
Contribution maximum per year 40% of salary $6,000
Age 50 and older catch-up $6,500 $1,000
Investment options Fewer More
10% penalty for withdrawals prior to age 59 and a half Yes Yes
Phaseout for tax deductibility No Begins at $104,000 AGI for married couples

“Why would I want to rollover some of my 401(k) into an IRA though?” you may be asking yourself. Some possible benefits of an in-service rollover are:

  • Diversification out of your company plan
  • With an IRA, you will be the owner of the account compared to only a participant in a 401(k)
  • Many investment options in an IRA versus limited funds available for Lockheed employees in the 401(k)
  • Greater ease of management due to consolidation
  • Reduces potential overlapping of investments
  • Ability to take advantage of tactical investment strategies and downside protection strategies
  • Possibility to continue contributions into a retirement account once you hit your annual 401(k) limit

Important considerations:

  • You must age 59 ½ or older in order initiate an in-service rollover
  • While an IRA will provide significant diversification benefits, it is not a guarantee of greater returns
  • Both a 401(k) and an IRA have potential to lose value
  • With more investment options available in an IRA, the fees will be different from those of 401(k) investments
  • You may roll over all or part of the amount eligible
  • Call us for further insight and expert advice

IRAs and 401(k)s each have their own advantages and disadvantages, but in most cases, an in-service rollover provides great benefits. Now that you armed with this knowledge, you can make an informed decision as to whether or not such an action makes sense for your situation.

For more tips like these, click here to sign up for our weekly email blog newsletter. If you would like to get better educated on Lockheed retirement strategies, click here to download our Free Report titled Retire with Confidence: The Top 4 Things You Can Do Now to Maximize your Lockheed Retirement. And, if you want to have face time with a Lockheed Retirement Specialist², you can click here to schedule an appointmentclick here to sign up for our Lockheed Retirement Workshop or click here to just give us a call (817) 210-3444.

Be sure and check back next week for more incredibly valuable information. Cheers!

Disclosures*

Financial Planning and Investment Advisory offered by SWMG, LLC a Registered Investment Advisor.

Lockheed Martin Retirement Specialist is not an official title or professional designation nor is it conferred by Lockheed Martin on any individual or company.

Our Complementary consultation and free report are for informational purposes only and provided free without any obligation to utilize or retain our investment advisory services.

SMWG, LLC is not affiliated with or endorsed by Lockheed Martin Corporation. Our expertise comes from working with LMT employees for several years and helping them to retire with confidence.

Investing involves the risk of loss, including loss of principal. Past performance does not guarantee future results. Investment products are not FDIC insured, have no bank guarantee, and may gain or lose value. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable for a client’s investment portfolio.