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A financial adviser shares the No. 1 thing 30-somethings should do by the end of the year

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Rollover 401(k)s from previous jobs to get the most of your money.

2017 is rapidly approaching, and if you’re a mid-career worker looking to straighten your finances out before the year’s end, there’s an easy but important to-do you can check off your list in short order.

“I think the most important topic for 30- to 40-year-olds — or young professionals — to address is taking financial inventory of their assets and liabilities,” Andrew Rafal, an Arizona-based financial adviser at Bayntree Wealth Advisors, told Business Insider.

One of the biggest assets American workers have is retirement accounts. While the notion may be to set it and forget it, these accounts are portable and should be managed throughout your career to get the best returns.

“The average 40-year-old may have changed jobs three to four times in their working career and could potentially have 401(k) accounts at each firm,” Rafal said. “One of the benefits of consolidating your old 401(k) accounts is that it provides more flexibility to choose the investment strategy that is right for your goals,” he said.

These are the primary options for streamlining your retirement accounts:

  • Rollover the money into your current employer’s 401(k) plan (tax-free now, taxed on withdraw).
  • Move the money into an IRA (tax-free now, taxed on withdraw).
  • Move the money into a Roth IRA (taxed now, tax-free on withdraw).

One thing you should never do is cash out, since “you’ll pay a 10% penalty plus taxes on the money you take out,” explains financial planner Sophia Bera.

For each of these options, start by contacting the custodian — or holder — of the account to see what items are needed to expedite a rollover, says Rafal.

“In many cases it is just a verbal authorization from the account owner specifying which institution the check should be payable,” he said. At this point, Rafal says, you’ll want to get with your financial adviser to review your investment options and goals.

If you’re hoping to make better returns on the money in your retirement account, you may choose to move the money into an IRA or Roth IRA, rather than rollover into your current 401(k), because it will give you the flexibility to choose funds with potentially lower fees, like index funds, Bera says. Check out this handy graphic to understand whether a traditional IRA or Roth IRA would be best for you.

In any case, combining multiple accounts will likely save you money on admin fees.

The bottom line: Work with a financial adviser to determine what kind of investments and returns you want to make at this stage in your life, and streamline your retirement accounts to help you get there.

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