Roll over 401(k) into an IRA when leaving a job

The Ticker

January 26, 2001|By JULIUS WESTHEIMER

When you leave a job, how can you take your tax-deferred retirement program with you? "Roll over your 401(k) into a self-directed IRA," says Ed Slott, retirement adviser. "Both accounts let money grow tax-deferred until you retire - but an IRA is more flexible before and after retirement.

"The average 401(k) has limited options, but an IRA lets you invest in individual stocks, bonds, mutual funds, etc. And it's easier to withdraw funds from an IRA before age 59 1/2 - the usual minimum age for withdrawal."

WHY DIVERSIFY? Although technology, cyclicals, basic materials and communications stocks were hard hit last year, these sectors registered double-digit gains: utilities, health care, financials, energy, transportation and consumer staples. (Data from Standard & Poor's)

SPLIT SIDELINE: Did you know that mutual fund splits do not benefit investors? "Splits benefit companies," says a Thompson Financial Co. study, "because it's easier to buy and sell lower-priced shares. Mutual fund share splits are designed to lure investors who think of splits as buying opportunities. Conclusion: Any split - fund or stock - is not by itself a reason to buy."

MONEY MATTERS: "We are bullish on the economy and have confidence in a nimble Fed which should lower rates 100 basis points (1 percent) in the first half of 2001." (Montana Investment Advisor)

"For the fourth time since 1990, both 10- and 20-year Treasury bonds received our monthly sell signal. Prior sell signals have always been followed by lower yields. 30-year T-bond yields could eventually fall to around 4.60 percent." (Fahenstock Report)

"If you don't want to worry which way inflation is headed and want to lock in a `real' (inflation-adjusted) rate of return, consider inflation-indexed bonds." (InvesTech Mutual Fund Advisor)

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