- It promotes ease of recordkeeping and the convenience offered by a consolidation of accounts
- A reverse rollover potentially increases the amount you can take as a loan in a retirement plan -- if the plan allows for loans
- And the 401(k) plan may offer access to lower expense ratio mutual fund share classes
Another benefit may be creditor protection. Qualified retirement plans, such as 401(k)s, are federally protected from seizure by creditors, even if you file for bankruptcy. IRAs can have creditor protection as well, but such laws vary from state to state.
Of course, no investment strategy is perfect, and the IRA-to-401(k) rollover does have some possible drawbacks. Advisors often tout the wider investment choices available in an IRA -- and the fact is, not all 401(k) plans allow IRAs to be transferred in. But, all in all, it may be a good idea to consider a little reverse engineering for your retirement savings strategy.