5 Reasons To Take Your Retirement With You By Kentucky 401K Plans Expert Alan Mercurio

www.mercurioadvisors.com

Recently I was asked by a new client if he should leave his 401k at his previous employer. This question is nothing new; however, I feel that the current economic environment merits a response to this question. In my opinion, there are many reasons why leaving your 401k with your previous employer is a bad idea. Here are five things I want you to consider in such a situation. They are as follows:

• Loss of Control

Proper investing is a matter of controlling that which you invest. Most 401k/403b plans have a predetermined group of funds into which you can contribute. This arrangement is made by the company often long before you got there, and is not likely to change to fit your needs. In other words, the company controls and owns the plan! The investor merely owns shares in the plan and usually has no say when the plan changes, such as when an investment choice is added or eliminated. It is truly better for you if you stay in control!

• Investment Selection

Most employer-relationship retirement plans offer a selection of investments in which the employees may invest. Normally, your choice is somewhat limited by the provider at the request of your employer. This is done for a couple reasons, which are as follows:

1. This makes it easier for the employees to set up their plans. If they were offered too many choices, most employees may choose to do nothing for fear of making a mistake. Limited participation makes it harder for the employer to take full advantage of the plan and they do not want that.

2. Smaller investment selections reduce the liability of the sponsor company. If the company added investments with a higher degree of risk, the case could be made that they (the company) recommended the investment by including it in the plan; thus, it would be their fault your money was lost! Your company does not want that liability.

Mutual funds are pooled investments; they tend to be an expensive alternative to many other investment vehicles on the market. The introductions of other alternative investments, gave the retail investor a leg up over the average 401k/403b investor. Now you can trade like the big boys and get big-boy results. Plus, you can trade in real time.

• Investment Protection

Today´s investor is looking for protection of principal, whether by choosing more conservative investments like fixed indexed annuities or hedging investments with some type of protection. These choices are not available inside the typical 401k type investment; in fact, many retirement plans have now changed the classically-safe money market accounts with what is commonly known as a "Capital Preservation Fund".

• Beneficiaries Could Loose Options For Stretching It Out Over Their Lifetime

The Pension Protection Act of 2006 tried to address this, but the problem is that in 2009 many plans still do not comply with PPA2006; therefore, if you pass away and your children are the beneficiaries of your 401k, they will have two options. They can take the money over five years, or they can take it in a lump sum and pay taxes in full at the time of distribution. The more lucrative option of stretching the account over their lifetime is often eliminated.

• No Investment Advice Available

This is probably the biggest disadvantage to leaving your 401k/403b plan with your previous employer. How many times have you received investment advice from your plan provider? Probably not too many of you have received such advice. The plan provider may give you some idea about their plans choices during your initial enrollment period, or possibly during an annual open enrollment period when the representative is back for new hires. Most advisors who work in this market do not provide advice to the rank-and-file employees. They are there for one reason, which is to work with the owners of the company, whom they assume have the deeper pockets.

Over the last several months we have seen that being passive with your investment dollars can hurt you more than help you. Many people have lost their jobs or changed careers for other reasons. Now more than ever, you must be on top of those accounts if you want to achieve your goals. The days of not opening those monthly statements for fear of what is inside are truly behind us. Please take a more proactive role in your investment future. When in doubt, roll it out!

For more information about the portability of your plan go to our website at www.mercurioadvisors.com and click on contact us and for your free plan review.

Mercurio and Associates Inc.

Alan Mercurio

330 N. Evergreen Rd., Suite #3

Louisville KY 40243

502-253-9366 or 866-672-5456

Registered Representative offering securities through First Allied Securities Inc. A registered Broker/Dealer Member FINRA/SIPC. Investment Advisor Representative offering services through First Allied Advisory Services Inc.