What are my options to consider when I am retiring or changing jobs?

What Are My Options When Retiring or Changing Jobs?

As you approach retirement or consider changing jobs, understanding your retirement plan options is crucial to your financial future.

Key Options for Your Employer’s 401(k) or Other Retirement Plan

There are typically four options to consider when leaving an employer’s retirement plan, each with its benefits and considerations:

• Roll your retirement account into an IRA (IRA Rollover): This allows you to maintain the tax-deferred status of your savings and may offer more investment choices.
• Leave the money in your former employer’s plan, if allowed: This option may be convenient if you are satisfied with the plan’s investment options and fees.
• Move the assets to your new employer’s plan, if permitted: Consolidating your retirement savings can make management easier if the new plan accepts rollovers and offers attractive investments.
• Withdraw the entire balance or “cash out” of the plan: While this provides immediate access to your funds, it may result in taxes and potential penalties.
• Convert all or part of your retirement account into a Roth IRA (Roth IRA conversion): This can provide tax-free growth potential, but you may owe taxes on the amount converted.

Each option has its advantages and disadvantages, but the decision should fit into your overall financial plan. For more information, see Financial Planning.