A basic guide on how, why and when to roll your 401(k) to an IRA.

Changing jobs? Don’t forget to take your 401(k) with you!

Did you realize when you leave your job you may have a golden opportunity for rolling over your 401(k) into an IRA? Taking your money with you is a great way to keep track of your assets and reduce personal paperwork. This is especially true if you have had several employers over the years, and a 401(k) plan with each one. Depending on your situation, it may be perfect for you to convert those 401(k) accounts into an IRA with TradeKing. Our reps can help you through the process. Keep in mind, if not done properly, there may be unnecessary short-term tax consequences when moving retirement funds from one institution to another. Be sure to contact your tax advisor.

401(k) versus Individual Retirement Account (IRA)

It pays to start investing early towards your retirement years. It’s also smart to invest using all retirement account types available to you.

401(k) plans are employer-sponsored retirement plans in which you can choose to participate (or not). Your employer sets the terms of their 401(k) program, which may include a company match for employee contributions along with a specific menu of investment choices. Usually 401(k) contributions are made with pre-tax dollars and are deducted automatically from your payroll check.

Investing in an IRA means opening a retirement account on your own, not via your employer. Many investors participate in both their company’s retirement plans as well as open their own IRAs. The two most popular account types are Traditional IRAs and Roth IRAs.

Depending on your personal situation, your contributions to a Traditional IRA, may be tax-deductible. That can be handy for reducing your tax burden in the short term, but you’ll be required to pay taxes on all withdrawals in your retirement years. A Traditional IRA also allows your investment to grow tax-deferred, meaning you’re not paying capital gains taxes each year.

If you qualify, Roth IRAs offer a different benefit to investors. With a Roth IRA, you invest post-tax dollars now and receive no tax deduction — but you can then withdraw funds tax-free during retirement. Roth IRAs allow your invested funds to grow tax-free, which may save you plenty in taxes in the long run.

TradeKing’s representatives would be happy to walk you through these and other types of retirement accounts. TradeKing offers no-fee IRAs with a wide array of personal finance investing choices. We cater to self-directed investing, so ultimately you call the shots on your investment choices. We stand ready to introduce you to resources and investing news to help you find the investments you seek. You should also check with your personal tax adviser to see if either of these retirement accounts is suitable for you.

How should I invest for my retirement?

Great question. Today investors can choose from a wide variety of investments vehicles, from investing in bonds to trading the stock market to much more. Many beginning investors may start seeking ideas from independent research reports. Investors with a more active interest in the markets may lean towards in investing in stocks, based on investing articles and the business’ fundamentals.

Your investments can reflect your opinions and values, too. Some people prefer value investing for long-term investing goals like retirement; value investing seeks stocks that may be out-of-favor currently and may therefore represent a bargain in the longer-term. Other investors opt for socially responsible investing choices, also referred to as green investing, environmentally responsible investing or ethical investing. These are attractive investment vehicles that also match individual investors’ personal values about the environment and other social issues.

However you’re inclined, TradeKing makes it easy to research your online investing choices and learn some solid investing basics. Our investing tools help you make smarter personal finance investing choices for your personal needs. After all, smart investing today is the first step towards future prosperity in your golden years.

Investing for your kids

Why not get your kids started investing, too? Many investors don’t realize that they may be able to open different types of accounts for their children. Investing for your kids gives you a chance to teach your children sound personal finance skills, while getting them started early on their financial futures. Ask a TradeKing representative about the account types which may be best suited to your family’s needs.

TradeKing: an award-winning online stock and options broker

A nationally licensed brokerage, TradeKing helps self-directed investors become smarter and more empowered, every day. At TradeKing we offer the same fair and simple price to all our clients — just $4.95 per trade, plus 65 cents per option contract. You’ll trade at that price, no matter how often you trade, or how big or small your account may be. That’s our idea of fair and simple.

TradeKing earned SmartMoney’s maximum 5 stars for exceptional customer service from 2008 through 2012. The SmartMoney online brokerage survey ranks brokers on criteria including commissions, trading tools, investment products, customer service, research, interest rates, banking amenities and mutual funds.