Retirement Planning & 401k Rollover
Retirement Planning & 401k Rollover
When it comes to rolling over your retirement savings plan, 401(k), 403(b) or 457...You've Got Option
Cash Out (and Lose Out)
Cashing out is deceptively attractive. You look at your statement and see a big bottom-line number. You can think of things you could do with that, right? But, hold on. This option will cost you more than you'd expect.
- 20% federal income tax
- 10% IRS premature distribution penalty if younger than 59 1/2
- Additional taxes, based on tax bracket
- Loss of potential growth
Before all is said and done, you're apt to lose a huge chunk, both short and long-term.
Stay in
It's never smart to pull up stakes in haste. Just because you're no longer employed there doesn't mean you can't continue to make your old 401(k) work hard for you.
- Don't close out in haste
- The old plan may be "gold" because of the cost, the investment options or any number of other factors
Weigh the Pros and Cons
| Why? | Why not? |
| Simple, no paperwork | Contributions, vesting have stopped |
| Maintain tax deferral | Possible limited loans, withdrawals |
| Possible attractive investment options | Lack of control, posible unattractive investment options |
| Possible lower fees | Possible higher fees |
Roll Over
A) Move to a New Employer Plan
| Why? | Why not? |
| Consolidate all your assets | May not be able to consolidate your assets |
| Ability to transfer between investment options | Possible higher costs |
| Maintain tax deferral | Mor paperwork |
| Better options, choices | Possible limited options, choices |
B) Move to an IRA
Why move to an IRA?
- Tax-deferred accumulation
- May want to use 'conduit IRA' to maintain portability of qualified money source
- Wide range of funding options
- No loans
- 10% IRS premature distribution penalty for withdrawals before 59 1/2
- Availability of 72(t) distributions
For help in finding out the best option for you contact Joanna Moran today!
Before you jump from your present plan, make sure what you're jumping to represents a better value...in terms of investment options, flexibility, and/or fees.
If you determine rolling over makes the most sense...compare your new employer's plan to either a traditional or Roth IRA before you make a move. Consulting with your financial and tax advisors is highly recommended.
For a comprehensive review of your personal situation, consult your tax advisor. Neither Cetera Advisor Networks nor any of its representatives may give tax advice.