New Job? Options for Retirement Savings

Ahhhhh. Every once in a while you catch yourself drifting off into thoughts of retirement. No alarm clocks, a secluded beach and nothing but time. Then your phone rings and it’s back to work. Not that you don’t enjoy your career; it’s helping you save for the day on that secluded beach. And your retirement saving is going pretty well. So is your career. You just accepted a position at a new company that’s a good step up the corporate ladder. Now, after participating in your old employer’s retirement savings plan for a number of years, you have to make a decision regarding what happens to your retirement savings as you move on to a new job. You have several options:

Roll your retirement savings into a Rollover IRA
This option provides many investment options and allows you to consolidate eligible distributions from a number of retirement plans into a single account. In addition, you’ll avoid paying current income taxes and any early withdrawal penalties. It also allows you to keep your retirement investment’s tax-deferred status and provides you the option of converting your money into a Roth RA.

Move your retirement savings to your new employer’s plan
When you change jobs, your new employer may allow you to move the assets from your previous job into their plan. This allows you to avoid paying current income taxes and any early withdrawal penalties as well as keep a tax-deferred status for your retirement savings. However, this option does limit investment options (to those offered by your new employer’s plan) and may reduce control of withdrawals/distributions per the rules of your new employer’s plan.

Leave your retirement savings in your old employer’s plan
Some employers allow former employees to leave their savings in their plan after they leave. Like the previous two options, this choice allows you to avoid paying current income taxes and any early withdrawal penalties, and it allows you to keep your retirement investment’s tax-deferred status. This option does limit investment options and may reduce control of withdrawals and/or distributions.

Take a lump-sum distribution in cash
What is a lump-sum distribution? This occurs when you receive your entire retirement account balance from your former employer’s savings or pension plan in one year. This is an option that provides immediate access to your retirement savings, but it can severely reduce your account’s worth due to tax implications. This choice ends the tax-deferred status of your retirement savings, and your employer is required to withhold 20% as prepayment of federal income tax. The account could be subject to state and local taxes as well. Plus, if under age 55, you could be required to pay the IRS a 10% early withdrawal penalty.

Which option should you choose? When it comes to your retirement, you want to be sure you make the right decision. Why not talk to the financial professional a the Vantage Investment Services Group?

 
_{Retirement options offered through LPL Financial Services are designed for U.S. residents only. Services are available exclusively through our U.S. registered representatives. LPL Financial Services' U.S. registered representatives may only conduct business with residents of the states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state.}