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Objective Retirement Investment Advice
from Orchid Wealth Management

Take a moment to reflect on your retirement investment goals.
Our blog has comprehensive insights for business leaders, management and individuals
​to strengthen fiduciary competence and practices. 

San Francisco Bay Area 401(k) Plan, To Rollover or Not to Rollover?

4/5/2017

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​Many of the world’s largest companies and employers including Apple, Google (Alphabet), Gap Inc., Facebook, Wells Fargo, Safeway, and Genentech are here in the San Francisco Bay Area. They attract the smartest and most talented people in the world. At any given time, people are either being hired on as a new employee or leaving a company to join a new one. One of the biggest decisions that a person needs to make when they are joining a new company or leaving a company is what to do with their current retirement plan money.

There are a few options to decide from.
  • Cash out.
  • Keep the money in the current 401(k) plan.
  • Rollover into the new company’s 401(k) plan.
  • Rollover into an IRA plan. 

The decision is not always easy or cut and dry. There are several factors to consider such as:
  • Plan investment options and flexibility.
  • Plan fees.
  • Company match.
  • Contribution limits
  • Tax considerations
​
One quick way to quickly check the quality of a company’s 401(k) plan compared to its peers is to check its BrightScope rating. BrightScope is a third party company that compares and rates 401(k) retirement plans using the data found within the publicly accessible Department of Labor/IRS Form 5500. The form 5500 is filed by plan sponsors annually and is available to the public and employees who want to get specific information about the plan and its vendors. BrightScope rates the 401(k) plans on Total Plan Cost, Company Generosity, Participation Rate, Salary Deferrals, and Account Balances.

Here are some of the San Francisco Bay Area 401(k) plan ratings as of April 2016:

Apple Inc. 401(k) rating of 77. The highest in the peer group is 90.
Google 401(k) rating of 89. The highest in the peer group is 90.
Gap, Inc. 401(k) rating of 63. The highest in the peer group is 84.
Facebook, Inc. 401(k) rating of 84. The highest in the peer group is 90.
Wells Fargo 401(k) rating of 80. Highest in the peer group is 92.
Safeway, Inc. 401(k) rating of 50. Highest in the peer group is 80.
Genentech, Inc. 401(k) rating of 86. Highest in the peer group is 90.
Uber Technologies, Inc. 401(k) rating of 63. Highest in the peer group is 88.
Linkedin, Inc., 401(k) rating of 86. Highest in the peer group is 92.

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It is a good idea to work with your company and its human resource department to determine whether or not to stay in a plan or roll it over to another plan or an Individual Retirement Account. Additionally, it is smart to talk with a financial advisor who is a “fiduciary” to get additional insights and thoughts on the pros and cons of each option.. The 401(k) rollover decision is very important and can make a major difference to your future retirement and ultimate nest egg. ​
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​Orchid Wealth Management has a stress free strategy to help you grow your portfolio.
Call Seth Swenson at 1(628)400-7384 to schedule a free consultation. Thank you.
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    Seth Swenson, MBA 
    President and Lead Advisor at Orchid Wealth Management
    in Palo Alto CA.

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