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by Wealth Strategies Partners

Ask an Advisor w/ Dalton Harris: Job Changes

I’ve Changed Jobs! Now What?

Job changes often bring a wide array of “to-dos” when they occur. Far too often do we see clients forget or neglect to consider their options with old retirement plans (401(k) or 403(b)).  When it comes to keeping your financial house in order, this is a pivotal step to clean up assets in “No mans land”. Below, we’ll discuss your available options and their respective pros & cons.

If you’ve changed jobs or are retiring, rolling over your retirement assets to an IRA is one possible solution. This option gives you access to a wide range of investments, the convenience of having consolidated your savings in a single location, and when done properly, is a non-taxable event.

In addition to rolling over your 401(k) or 403(b) to an IRA, there are other options:

• Leave money in your former employer’s plan, if permitted.

You may like the limited investments offered in the plan and may not have a fee for leaving it in its current state. Not a taxable event.

• Roll over the assets to your new employer’s plan if one is available and it is permitted.

Not all employer plans accept rollovers, but if this is an option with your new employer, this is not a taxable event. It would also keep a larger sum of money working for you.

• Cash out the account.

This is considered a taxable event and has a loss of investing potential. This often proves to be costly for young individuals under 59 ½ as there is a penalty of 10% in addition to income taxes.

• Rollover to an IRA.

A rollover will likely offer more investment options, is not a taxable event, and allows you to consolidate accounts. Subject to fees, as applicable.

As you can see, there is much to consider in deciding what to do with the savings in a former employer’s retirement plan. You might have several forgotten accounts that you could put through this same decision-making process. Gathering all necessary information and reviewing these decision factors can help you select the option that best suits your financial house!

Be sure to consider all of your available options and the applicable fees and features of each option before moving your retirement assets. 

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