March Madness, 3-Point Shots, and IRAs

Read Time / 2 Minutes

Theme / Retirement Planning

Most of us, whether we follow college basketball or not, have heard of March Madness, the college basketball championships.  For those that follow the tournament, it includes 67 competitive basketball games among teams that have proven themselves to be among the best in the nation. Occasionally the scores are lopsided, but typically they are decided by just a few points, and some games are decided by a last-second 3-point shot.  Celebration erupts when a player makes that buzzer-beater shot, allowing their team to play another day.

3-pointers also come into play in investing for retirement, consisting of 3 little known benefits of rolling an employer-sponsored retirement plan into an IRA.  These 3 benefits should lead us to celebrate, maybe not at the time of the rollover, but later when the need arises.

Normally there is a 10% penalty for withdrawals before 59½ in retirement plans, but IRAs offer 3 exceptions:

1)      distributions for higher education expenses,

2)      up to $10,000 of first-time homebuyer expenses, and

3)      distributions to pay for medical insurance premiums for certain unemployed individuals.  

If you have an old employer-sponsored retirement plan (401k, 403b, 457), it would be wise to roll it over into an IRA, because anytime we can apply wisdom to life, we benefit.  “The one who gets wisdom loves life; the one who cherishes understanding will soon prosper” (Proverbs 19:8).

The 3-point shot in basketball is a peripheral shot – it is launched from beyond an arc that is 20 feet and 9 inches from the basket – but it is a strategic shot that wins games.  Rolling over your 401k into an IRA may seem like a peripheral shot, but it can become a game-winner in the game of life.

Doug Hanson, MBA

Wealth Advisor

208.697.3699

doug@christianwm.com