scottsdale financial advisor

Innovative Retirement Solutions, PLLC

  • Who We Serve
    • Current Retirees
    • Future Retirees
    • Business Owners
Menu
  • Who We Serve
    • Current Retirees
    • Future Retirees
    • Business Owners
Login
Become a Client
scottsdale financial advisor

Innovative Retirement Solutions, PLLC

  • Who We Serve
    • Current Retirees
    • Future Retirees
    • Business Owners
  • Login
  • All Posts
  • New Client Advice
Menu
  • All Posts
  • New Client Advice
  • Raymond Singh, AWMA®, RFC® Raymond Singh, AWMA®, RFC®
  • - May 19, 2021
  • - 7:04 am

Leaving the Company? Know Your Retirement Plan Options

Your retirement plan may offer you several options for managing your retirement plan assets when you change jobs or retire. Understanding these choices will help you narrow down your choices.

Your Options

Following are the options that may be available to you. Note that these selections apply to your contributions, the vested portion of your employer’s contributions, if any, and the earnings attributed to both.

  • Keep your money in the plan. You may be able to leave your savings in your employer’s retirement savings plan. Usually, annual required minimum distributions must begin after you reach age 70½. Although you can no longer make contributions, you can still control how the money is invested.
  • Roll over your money to another retirement account. You may move your money into an individual retirement account (IRA) or, if you are changing jobs, into your new employer’s retirement plan, if permitted by your new employer. With a “direct rollover,” the money goes directly from your former employer’s retirement plan to an IRA or to your new plan — you never touch the money. This option also allows you to continue deferring taxes. If you touch the money, you may be subject to a 10% additional tax.1
  • Take a cash distribution. You can choose to have your money paid directly to you in a lump sum or in installments (if you are retiring). However, you will be subject to income taxes, and if you are younger than age 59½, a 10% additional tax. In addition, your employer will withhold 20% of your distribution to put toward your federal income tax obligation. Therefore, if you are under age 59½, the amount you receive could be significantly less than you expect.1

Avoiding an Immediate Tax Bite

If you receive a distribution, you can avoid an immediate income tax bite and the penalty if you roll over the entire amount into an IRA or a qualified employer plan within 60 days. You will receive your distribution minus 20% in withholding for federal income tax, but you can make up the withdrawal amount from your own pocket. The withheld amount will be recognized as taxes paid when you file your regular income tax.

Think carefully before making any decisions about the money in your retirement plan. It may also be a good idea to discuss your options with a tax advisor.

Source/Disclaimer:

1Withdrawals will be taxed at then-current rates. Withdrawals prior to age 59½ are subject to a 10% additional federal tax.

Share on facebook
Share on twitter
Share on linkedin

Recent Posts

credit card

Finding the Right Credit Card for You

July 16, 2021

With so many credit cards available, it’s not surprising that

Read More »
planning for retirement

5 Common Investment Mistakes When Planning for Retirement

July 10, 2021

Only about 23% of American workers say they are “very

Read More »
investment

Does Your Portfolio Reflect Your Risk Tolerance?

June 17, 2021

There are many types of risks associated with investing. Understanding

Read More »

Leave a Comment Cancel Reply

You must be logged in to post a comment.

10565 N 114th St #102 ​
Scottsdale, AZ 85259 ​
​
raymond.singh@lpl.com ​
Phone: (480)443-3303

  • Contact Us
  • About Us
  • Articles
  • Weekly Research
  • Risk Profile Questionnaire
  • Become a Partner
scottsdale financial advisor

Business Hours

scottsdale financial advisor

Monday - Friday
8:00am - 5:00pm MST

scottsdale financial advisor
scottsdale financial advisor

Business Hours

Monday - Friday
8:00am - 5:00pm MST

DISCLOSURE: Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.

The LPL Financial representative associated with this website may discuss and/or transact securities business only with residents of the following states: Arizona, California, Colorado, Florida, Illinois, Missouri, Montana, Nebraska, New Mexico, Nevada, New York, Texas, Utah, Virginia, Washington and Wyoming.

  • about
  • Business Owners
  • Current Retirees
  • free-advice
  • Future Retirees
  • Home
  • weekly-insights