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Retiring? Leaving your job?? Left retirement plans behind at your former employers? Generally confused about your options and the consequences of each?
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to let us your want help and we'll hold your hand thru the discussing the options and handling the complex paperwork! WHAT WILL YOU DO WITH YOUR RETIREMENT PLAN MONEY?
Your company sponsored retirement plan (401k, 403b, 457, Tax Sheltered Annuity, profit-sharing or pernsion plan, etc) is typically one of the largest pieces of your financial puzzle. Whether you are retiring or just changing jobs the options can be confusing and one of the biggest mistakes we see is making the choice of what do alone or with only input from a friend or HR department. Typically, when you're in transition, you have 4 basic options to consider when deciding what to do with your retirement account savings. Here they are... OPTION 1: TAKE YOUR SAVINGS IN CASH
Pros
Cons - Your savings no longer grow tax-deferred
- A 10% early withdrawal penalty generally applies to people under age 59.5
- You will be subject to all applicable federal, state, and local taxes
- Without compound growth, you may compromise your wealth in retirement
- The distribution may push you into a higher tax bracket
OPTION 2: ROLL YOUR SAVINGS INTO AN IRA Pros Money continues to grow tax-deferred You avoid the 10% early withdrawal penalty if under age 59.5 Additional investment options may be available You control how to access your savings You have the potential to convert assets to a Roth IRA in the future You have the potential to move IRA Rollover assets into a future employers plan
Cons Note: The choice is obvious, yet the procedure - usually called an IRA Rollover or Trustee-to-Trustee transfer - is intricate. I perform these rollovers regularly*.
OPTION 3: KEEP YOUR MONEY IN YOUR PREVIOUS EMPLOYER'S RETIREMENT PLAN, IF ALLOWED Pros Money continues to grow tax-deferred Avoid the 10% early withdrawal penalty if under age 59.5 Little or no additional paperwork Asset allocation strategy remains intact May allow you to withdraw money without penalty under certain circumstances
Cons Lack of control Plan may place limitations on inactive or retired participant accounts Investment options limited to those offered in plan Withdrawals and distributions are subject to plan provisions Company may be acquired and/or change its plan in the future
OPTION 4: MOVE YOUR MONEY INTO YOUR NEW EMPLOYER'S RETIREMENT PLAN, IF ALLOWEDPros Money continues to grow tax-deferred Avoid the 10% early withdrawal penalty if under age 59.5 New plan may allow loans Investment options and features may improve compared to old plan Retirement assets are consolidated with one provider
Cons New plan may have higher fees that the old plan Investment options are limited to those offered in the plan Withdrawals and distributions are subject to plan provisions
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