 |
|
 |
|
When the time comes for you to change jobs or retire, it's important to understand your alternatives when it comes to your employer-sponsored savings. Here are four options to consider:
1. Take a distribution. Though it's tempting to take part or all of the money in a lump sum, you could lose a big portion of your savings to penalties and taxes. You'll also lose future tax-deferred growth on any funds withdrawn.
2. Leave the money in your employer-sponsored plan. Keeping the money in the old plan requires little effort. You won't incur taxes or penalties, the money continues to grow tax-deferred and you can transfer the money to another employer-sponsored plan or IRA later. Your investment options and access to the funds, however, may be limited and you may have to pay an administrative charge. Keep in mind that by keeping the money where it is, part of your funds may be in your previous employer's stock.
3. Transfer money to a new employer's plan. You avoid incurring taxes and penalties and the money continues to grow tax-deferred. Then again, your new employer's plan may not accept funds from the previous plan. There's also the risk of being limited in your investment options.
4. Roll it into a traditional IRA. If you follow the IRS' guidelines on how to rollover your funds to an IRA, there are no taxes or penalties, and the money continues to grow tax-deferred. You have a much broader range of investment options, so you can opt for more aggressive or conservative investments depending on your risk tolerance and how close you are to retiring. You may incur a small administrative charge and if you have any outstanding loans from your previous employer's plan, they must be repaid before transferring the funds into an IRA.
In order to minimize taxes and penalties as well as keep track of your investments, be sure to research your options so you can keep the most of what you worked so hard to earn.
For more general information on individual retirement solutions, visit www.allstate.com.
|
|
|
|
