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Changing Jobs

Changing Jobs

May 18, 2022

If you recently changed jobs or are considering a new one keep reading.

Just as you would pack up your personal items off your desk as you prepare for your last day you'll want to review your options if you're enrolled in your employers retirement plan.

Option 1: Leave it where it is - If the plan allows you can leave the assets inside of the retirement plan of your former employer. You will want to make sure that you update any address and beneficiary information as necessary and that your family or trusted contact is aware of the account.

Option 2: Move it to your new employer - If your new employer has a retirement plan you will want to ask if the plan accepts rollovers so that you can review your options here. If so, you may be able to take advantage of benefits of qualified retirement plan provisions in the future, such as loans.

Option 3: Cash it out - While this is the recommendation we generally provide the least, life happens! There are reasons you may want to consider cashing out your retirement plan. This option generally has a tax consequence however so you'd want to review with your qualified tax professional first.

Option 4: Move to another tax deferred vehicle - Moving your retirement assets to another tax deferred vehicle can offer you the ability to maintain your tax deferred status in growing your assets and also avoid issues such as mandatory 20% federal tax withholding that is sometimes required when taking distributions from qualified retirement plans. You also have the ability to move your funds to any vendor you choose assuming they can open an IRA which can give you a more hands on approach.

As with anything there are pros and cons to all 4 of these options above. However, taking the time to review your options and what might be your best option is well worth it.

Before deciding whether to retain assets in a 401(k) or roll over to an IRA, an investor should consider various factors including, but not limited to, investment options, fees and expenses, services, withdrawal penalties, protection from creditors and legal judgments, required minimum distributions and possession of employer stock. Please view the Investor Alerts section of the FINRA website for additional information.