The Retirement Plan Rule you may not know about by Chris Nichols Financial Advisor.

BOCA RATON, FL, October 26, 2010

For many people, investing in a company sponsored retirement plan makes sense. If your employer offers a retirement plan (401k or 403b) it's usually advantageous for you to participate in it, and if they match a portion of what you contribute then it's well worth it. The challenge most people have with their employer sponsored retirement plan is not necessarily saving in it. The challenge for investors is often to decide how to invest their money withing the plan.
I always advise my clients to invest in funds that are consistent with their risk tolerance. So as an example, if your risk tolerance is low, you may consider investing in a short term bond fund, a general/fixed account or even a moderate allocation fund. However, the problem that many 401k's and 403b's have is a lack of sufficient investment options to allow for full diversification or opportunity to capture investment gains. Frequently, an employee with a 401k or 403b may miss out on an investment opportunity simply because his plan doesn't offer a particular investment as an option.
Take for an example the recent rise in the price of gold. Over the years, the price of gold bullion has increased substantially. Many employer sponsored plans do not have an option to invest in this commodity. As a result an investor would have missed out on gold's appreciation and an opportunity to see the retirement plan grow faster. So what's the solution? How can you take advantage of investment opportunities while still employed and participating in your plan?
Along comes a little known rule the IRS calls an, "in service distribution" or "non-hardship withdrawal". With this rule, the IRS allows you to rollover your 401k or 403b to an IRA (no taxes apply as long as the funds are transferred directly to the IRA). The advantage with the IRA is that now you have thousands of investment options to choose from rather than being limited with the options given to you by your retirement plan sponsor. In my experience most 401k's/403b's limit the employee to about forty investment choices versus the thousands of options a typical IRA offers. In most 401k and 403b plans, in order to qualify for the rollover you have to be at least 59 1/2 years old. Some plans though allow this at 50 or 55. You must check your retirement plan's Summary Plan Description (SPD) or contact your human resources department to determine if you qualify. If you would like me to review your plan description just visit my website for contact information and a free consultation form and I would be happy to assist you.

Chris Nichols is an investment advisor who has been delivering, not promising, loyal services for over a decade. For many years, Chris has provided answers to complex financial questions investors nationwide. Every investor is unique, so is every financial plan. This is why Chris uses a one-to-one approach when developing a financial plan. He values his clients' time, and respects their investment wishes. Chris believes in ongoing goal-based evaluation that tracks his clients' financial progress relative to their personal goals. Chris is very proud to provide high quality financial advice and service, and deliver it using today's latest technologies. Your relationship with Chris will be an ongoing, growing and positive partnership built on trust and confidentiality.