Is a Rollover into an IRA the Right Move for You as a McDonald's Employee?

Choosing an IRA rollover means that your money remains tax-advantaged and capable of growth, as in a McDonald's-sponsored plan. You may also gain more investment options than what may have been available in your McDonald's-sponsored plan. You may also gain oversight of managing these important retirement assets from your trusted Advisor.

If you roll your retirement plan assets over into an IRA account that you already own through your Advisor, you also receive the benefit of combined statements and holistic investment planning, making it easier to track your overall financial situation.

'Receive the benefit of combined statements and holistic investment planning, making it easier to track your overall financial situation.'

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Some of the benefits of rolling your money into an IRA include:

Tax-deferred growth potential: This generally avoids current income tax and distribution penalties when removed from a McDonald's-sponsored retirement plan.

More investment choices: This allows for additional contributions, if eligible. IRAs can be combined and handled by one provider, thereby reducing trustee costs and consolidating statements. Protection from creditors in federal bankruptcy proceedings. The combined amount of your required minimum distributions (RMDs) can be taken from any of your Traditional, SEP or SIMPLE IRAs.

However, there are also some important considerations that McDonald's should make before rolling over their money into an IRA, these include:

Internal management fees might be higher than in a McDonald's-sponsored retirement plan.
Fees and expenses depend largely on the investments you choose.
Loans from an IRA are not allowed.
Early distributions may be subject to a 10% IRS tax penalty in addition to income tax.
RMDs begin April 1 following the year you reach 70½ and annually thereafter; leaving the money in the former Fortune-500 plan may allow RMDs to be delayed until separation from service.
IRAs are subject to state laws governing malpractice, divorce, creditors (outside of bankruptcy), and other lawsuits; leaving the money in the former McDonald's-plan may provide additional protection against creditors.
Net unrealized appreciation (NUA) is the difference between what you paid for employer securities and their increased value. You lose favorable tax treatment of NUA if the funds are rolled into an IRA.

Hopefully, these insights will be helpful as you plan your retirement from McDonald's.

For more information about this topic, view our e-book here: https://retirekit.theretirementgroup.com/will-your-retirement-plan-retire-with-you-e-brochure-offer

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What is the McDonald's 401(k) plan?

The McDonald's 401(k) plan is a retirement savings plan that allows eligible employees to save a portion of their paycheck before taxes are deducted.

How can I enroll in the McDonald's 401(k) plan?

Employees can enroll in the McDonald's 401(k) plan through the employee portal or by contacting the HR department for assistance.

What is the employer match for the McDonald's 401(k) plan?

McDonald's offers a competitive employer match for contributions made to the 401(k) plan, which can help employees maximize their retirement savings.

Are there any eligibility requirements to participate in the McDonald's 401(k) plan?

Yes, eligibility requirements for the McDonald's 401(k) plan typically include being a full-time or part-time employee who has completed a certain period of service.

How much can I contribute to the McDonald's 401(k) plan each year?

The contribution limits for the McDonald's 401(k) plan are subject to IRS guidelines, which may change annually. Employees should refer to the plan documents for specific limits.

Can I take a loan against my McDonald's 401(k) plan?

Yes, McDonald's allows employees to take loans against their 401(k) savings, subject to certain terms and conditions outlined in the plan.

What investment options are available in the McDonald's 401(k) plan?

The McDonald's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles to help employees diversify their portfolios.

When can I access my funds from the McDonald's 401(k) plan?

Employees can access their funds from the McDonald's 401(k) plan upon reaching retirement age, or under certain circumstances such as financial hardship or termination of employment.

Does McDonald's provide financial education regarding the 401(k) plan?

Yes, McDonald's offers financial education resources and workshops to help employees understand their 401(k) options and make informed decisions about their retirement savings.

What happens to my McDonald's 401(k) plan if I leave the company?

If you leave McDonald's, you have several options for your 401(k) plan, including rolling it over to another retirement account, cashing it out, or leaving it in the McDonald's plan if you meet the criteria.