If you suddenly lost your job, what would happen to your retirement money? You have three choices with your 401(k). One may turn out to be better for your retirement goals than the other two.
Leave your 401(k) alone. The money will stay invested, but you may not have the control over it or access to it that you would like. Your investment choices could be few, and plan fees may be high. On the other hand, your old 401(k) may be a great plan, with very low fees and solid investments; if that is true, you may be better off just leaving the money where it is.
Withdraw the money. A "last resort," since you may incur a severe financial penalty. You won't get all the money you have accumulated; the I.R.S. will levy a 10% penalty for early withdrawal of the assets before age 59½, and the withdrawn assets are considered taxable income. Still, if you are ill or facing looming debts, this may be a useful move. 1
Roll it over into an IRA. A direct rollover of assets from a 401(k) into an IRA is not a taxable event. The destination traditional or Roth IRA can be one you create or one you already own. A rollover may mean additional tax-deferred growth for those assets as well as more investment choices and lower account fees. Sometimes, though, account fees for the IRA may be higher. A rollover to an IRA may be especially unwise if you have a lot of money in company stock. 1,2
Roll the assets over into a new employer's plan. You might be able to do this. It could be a plus or a minus – the range of investment choices in the new plan could be better or worse; the fees on the new plan could be higher or lower.
How is your retirement money positioned? Are you doing things designed to preserve and enhance your retirement goals? You may want to talk with me about your options. Call me at (850) 660-1164 or email me at firstname.lastname@example.org
Email me and I will send you a FREE specialty prepared Retirement eGuide. This eGuide is created to help you plan and answer some questions about retiring.
William Blanken Jr