While 401(k) plans have some good points, they also have a down side compared to a self directed IRA. It is suggested that anyone who wants to rollover an old 401(k) change over to a self directed IRA. There are many reasons for this and this article will help explain why it is better to roll over the 401(k) to a self directed IRA. One of the biggest reasons for changing the 401(k) over to an IRA, in the first place, is to allow for greater variety in investment choices. If changing over to a traditional IRA, a big part of the benefit is lost, as traditional types of IRA still have many limits on the type of assets you can invest in. The person rolling their 401(k) over should choose a self directed IRA, as it allows for full control of your money.
All IRAs are better than a 401(k) because 401(k)s are bound to your employer and their investment company. This means the company sets things up for the greatest benefit for itself and not for the greatest benefit of the person who holds the account. A self directed IRA is the best way to go as this type of account has a custodian that guides you through all the pitfalls and the rules, but does not control what happens in the account. When the account holder is not bound by other interests, there is no limit to the investments that can benefit the account holder. In conclusion, a self directed IRA is simply the best choice for rolling over a 401(k).