Individuals Changing Careers

Changing careers can be a stressful time. In addition to starting your new career, you might have to decide what to do with your retirement account held at your previous employer.  Here is a list of the four most common options available...

1.  Leave your savings in your current plan:  This option allows your savings to remain tax deferred and avoid potential taxes and penalties.  Some employers have a balance requirement that must be met in order to leave money in their plan.  Please check with the plan's administrator on any rules that apply.

2.  Rollover to your new employer's plan:  Your vested savings can follow you to your new plan and remain tax deferred and avoid potential taxes and penalties.  The employer sets the rules for whether or not rollovers can be made to their plan so be sure to check with the new plan administrator to ensure rollovers are allowed.

3.  Rollover to an Individual Retirement Account:  As with options one and two, your savings will remain tax deferred and avoid potential taxes and penalties.  An individual retirement account is commonly used when option one or two are not available or if the objective is greater investment flexibility.

4.  Cash out:  A cash distribution may help with current financial needs, but this option also involves the potential for taxes and penalties on the amount withdrawn.  You might want to consider a combination of a cash out and one of the three options above to help reduce potential taxes and penalties.

This is a quick summary of the most common distribution options.  Please contact my office if you have any questions or if you would like to discuss additional advantages and disadvantages of each of these options.  I look forward to the opportunity to work with you!