The Benefits of an IRA Rollover

By Doc Gallagher

As CEO of the investment and retirement-focused Gallagher Group, I maintain a website with “plain-speaking” educational materials on all aspects of financial planning. Many clients who I assist participate in employer-led retirement plans under a profit-sharing system, a 401(k), or a 403(b). Others simply contribute to an IRA annuity or private plan. When leaving a company, many are tempted to keep their retirement savings in their old account, as it appears to be simpler and entail less hassle. They feel the company stock is safe, secure, and appreciating at a steady rate.

My advice is to roll the money over into an independent retirement fund. This increases investment flexibility, while allowing retention of the same company stock if you wish. An unfortunate reality is that even Fortune 500 companies go out of business. Diversifying shareholdings ensures that you are never left holding a lifetime supply of worthless Eastern Airlines or Enron Corp. stock. A self-directed IRA rollover is advisable in a number of situations, including if the company is bought out, you quit the company or are fired, or if you retire.

The advantages of the well-structured IRA rollover extend beyond investment flexibility to include penalty-free access to funds before age 59 and a half. This is accomplished through IRS provisions 72T and 72Q, which eliminate the 10% early withdrawal penalty typically tied to 401(k) funds. Other benefits include no public disclosures, increased liquidity, and taxes paid only on money utilized as income. Avoid the temptation to funnel the old company’s funds into the retirement plan of your new company.

Again, the same inflexibilities and risk exposure exist with the new firm’s 401(k). A critical advantage of self-directed IRAs over employer plans is the safety of dependable money management. A reputable independent financial planner will apply retirement strategies that take your individual needs into account. An ideal retirement plan is consistent with personalized goals in tax avoidance, income distribution, estate planning, and insurance.

About the Author:

A well-known radio personality, motivational speaker, and published author, Doc Gallagher has more than two decades of experience in financial advising.


The Qualities That Make America Unique

By Doc Gallagher

With financial clouds making the headlines on a daily basis, many are questioning the direction that the U.S. economy is headed in and whether we have the collective political will to address tough economic issues. Despite this, the fundamentals of what makes America new, better, and different have never been more clearly visible. We are the only nation with a host of freedoms enshrined in our Constitution, including those of religion, free speech, assembly, and the press. This underlying belief in freedom has given our citizens the unique opportunity to pursue whatever career path they choose, with a world-class educational system to guide them. Our system of free enterprise and protection of inventions through patents has created technological innovation far beyond what we imagined was possible just a few generations ago. Like many Americans, I was sad to hear of the passing of Steve Jobs recently. Growing Apple Computers from his parents’ garage, he exemplified the entrepreneurial “can-do” spirit that makes the nation a free enterprise role model to emergent democracies.

Compassion is at the backbone of American freedom and individualism, and our citizens contribute 70 percent of the global aid given to missionaries and to poverty-stricken areas in developing countries. Our nation aims to safeguard its freedoms at home and works tirelessly to promote and protect democratic ideals around the globe. This compassion and dedication to liberty has its roots in the words of the founding fathers: “[all men] are endowed by their Creator with certain unalienable Rights, [and] among these are Life, Liberty, and the pursuit of Happiness.”

Not coincidentally, financial planning involves freedom as a defining concept as well. At the Gallagher Group, we strive to meet investment and retirement goals that are free of tax liabilities, market volatility worries, expensive probate, and lawsuits. By providing clients with the tools they need to make wise investment choices, we allow them to retire worry-free, with a stable income throughout their remaining years. We also provide strategies for efficiently transferring wealth to loved ones, enabling a legacy of quality education and continued financial freedom down through the generations. Naturally, sound financial planning is a prerequisite to freedom from worry in retirement. The Gallagher Group website recently featured the following Tip of the Day: “There is no such thing as a free lunch and there are no exceptions.”

About the Author:

Dr. W. Neil “Doc” Gallagher hosts a popular radio show that explores financial issues. Doc Gallagher’s most recent book is The Money Doctor’s Guide to Taking Care of Yourself.