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Retirement Planning & 401k Rollover

When it comes to rolling over your retirement savings plan, 401(k), 403(b) or 457...You've Got Option

Cash Out (and Lose Out)

Cashing out is deceptively attractive. You look at your statement and see a big bottom-line number.  You can think of things you could do with that, right?  But, hold on.  This option will cost you more than you'd expect.

  • 20% federal income tax
  • 10% IRS premature distribution penalty if younger than 59 1/2
  • Additional taxes, based on tax bracket
  • Loss of potential growth

Before all is said and done, you're apt to lose a huge chunk, both short and long-term.

Stay in

It's never smart to pull up stakes in haste.  Just because you're no longer employed there doesn't mean you can't continue to make your old 401(k) work hard for you.

  • Don't close out in haste
  • The old plan may be "gold" because of the cost, the investment options or any number of other factors

Weigh the Pros and Cons

Why?Why not?
Simple, no paperworkContributions, vesting have stopped
Maintain tax deferralPossible limited loans, withdrawals
Possible attractive investment optionsLack of control, posible unattractive investment options
Possible lower feesPossible higher fees


Roll Over

A) Move to a New Employer Plan

Why?Why not?
Consolidate all your assetsMay not be able to consolidate your assets
Ability to transfer between investment optionsPossible higher costs
Maintain tax deferralMor paperwork
Better options, choicesPossible limited options, choices

B) Move to an IRA

Why move to an IRA?

  • Tax-deferred accumulation
  • May want to use 'conduit IRA' to maintain portability of qualified money source
  • Wide range of funding options
  • No loans
  • 10% IRS premature distribution penalty for withdrawals before 59 1/2
  • Availability of 72(t) distributions

For help in finding out the best option for you contact Joanna Moran today!

Before you jump from your present plan, make sure what you're jumping to represents a better terms of investment options, flexibility, and/or fees.

If you determine rolling over makes the most your new employer's plan to either a traditional or Roth IRA before you make a move.  Consulting with your financial and tax advisors is highly recommended.

For a comprehensive review of your personal situation, consult your tax advisor.  Neither Cetera Advisor Networks nor any of its representatives may give tax advice.