Advice

New Job? Options For Your Retirement Savings

You just got a new job, but your retirement savings is still in your previous employer’s plan. What do you do with it? Deciding what to do with your retirement savings can be difficult. The best place to start is knowing your options. From there you can make an informed decision that’s best for your situation. Here are four options to consider:

Roll your retirement savings into an individual retirement account (IRA)

  • Allows for more personalized investment advice.
  • Gives you control over your retirement account, ability to choose account trustee as well as investments.  May provide more investment options.
  • Investment expenses for an IRA may be higher than those in your employer’s retirement plan.
  • Investments retain tax-deferred growth.
  • You have the ability to maintain your retirement savings along with your other financial accounts, and to have them managed by a single investment professional.

Leave your retirement savings in your former employer’s retirement plan

  • Contact your former employer to ensure you are eligible to remain in the plan. This is not always an option for participants that have terminated employment.  No immediate action may be required from you.
  • Fees and expenses are generally lower in an employer-sponsored plan than in an IRA and you will continue to have access to those investment choices.
  • Request a Participant Fee Disclosure/404(a)(5) Notice from your former employer to analyze plan expenses and investment information.
  • Once you leave the company you can no longer contribute funds to your former employer’s retirement plan.
  • Monies held in retirement plans are subject to plan rules that may potentially limit your flexibility to access funds.

Move your retirement savings into your new employer’s retirement plan

  • Contact your new employer to determine if they accept rollovers into their employee retirement plan. Not all plans allow rollovers.
  • Keeps all your employer-related retirement savings in one place.
  • Investment choices and other features will be limited to what your new employer’s plan offers.
  • Request a Participant Fee Disclosure/404(a)(5) Notice from your new employer’s Plan Sponsor to analyze plan expenses and investment information.

Liquidate your retirement savings into cash

NOTE: This option should generally be avoided due to the amount of taxes and loss of time and money spent saving for retirement.

  • Immediate access to your retirement money to use how you please.
  • Withdrawals from retirement plans (and IRAs) are generally fully taxable.
  • If you are under 59 ½, you may pay an additional 10% penalty to the IRS.

As with all financial matters, carefully consider the options before making a decision about your retirement savings. The advisors at Emprise Bank can help you fully understand your options so you can make the best decision with your retirement savings.