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KNOW YOUR OPTIONS

An experienced team is on your side

People change jobs for a variety of reasons, and navigating these transitions can be challenging. When you leave work – for whatever reason – you have a decision to make about the money in your retirement plan.

Summary of your potential options

Generally you have four main options to choose from. Take a few moments to consider some of the advantages and disadvantages of each option.
Advantages
  • You can consult with a financial advisor to help you choose an appropriate investment strategy and answer retirement planning questions.
  • Investment gains in your account remain tax-deferred.
  • Avoid early withdrawal penalties and taxes associated with cashing out your account.
  • Consolidation of your retirement assets may make asset allocation and rebalancing easier.
  • Gain independence from your former employer.
Disadvantages
  • You cannot borrow money against an IRA.
  • Assets may not be fully protected from the claims of some creditors.
  • You may lose access to features and benefits of an employer-sponsored plan that are important to you.
Review the fees and expenses you pay, including any charges associated with transferring your account, to see if rolling over into an IRA or consolidating your accounts could help reduce your costs. Employer-sponsored retirement plans may have features that you may find beneficial such as access to institutional funds, fiduciary-selected investments, and other ERISA protections not afforded to other investors. In deciding whether to do a transfer from a retirement plan, be sure to consider whether the asset transfer changes any features or benefits that may be important to you. 
Advantages
  •     Investment gains in your account remain tax-deferred.
  •     Avoid early withdrawal penalties and taxes associated with cashing out your account.
  •     Fiduciary oversight is managed by the plan trustee.
  •     Penalty-free withdrawals may be made from the plan if you are 55 or older the year you separate from service.
  •     Assets are protected from the claims of creditors.
Disadvantages
  • You typically cannot contribute additional outside assets to the plan.
  • Your investment options may be limited to what's offered by the plan.
  • Some retirement plans do not offer flexible distribution options, such as systematic withdrawals.
  • Many employer-sponsored retirement plans do not offer participants access to advice. If your former employer's plan is with Transamerica, you'll still have access to a retirement advisor for general retirement questions.
Advantages
  • Investment gains in your account remain tax-deferred.
  • Avoid early withdrawal penalties and taxes associated with cashing out your account.
  • Fiduciary oversight is managed by the plan trustee.
  • Assets are protected from the claims of creditors.
Disadvantages
  • The new employer's plan may not allow rollovers from previous employer-sponsored plans.
  • The new employer's plan may have less flexibility than an IRA and may have fewer investment options. 
Review the fees and expenses you pay, including any charges associated with transferring your account, to see if consolidating your accounts could help reduce your costs. Be sure to consider whether such a transfer changes any features or benefits that may be important to you. 
Advantages
  • You will have cash readily available.
Disadvantages
  • You will lose the opportunity for tax-advantaged growth and compounding.
  • You could be subject to a 10% federal tax penalty (if you cash out before age 59½).
  • The IRS requires withholding of 20% as prepayment of your federal income tax.
  • You may also be subject to state withholding for prepayment of state income taxes.
  • You could pay more in income taxes.

Talk to an advisor

You have access to a team of advisors who can help you pursue your goals. Have time now? Call us at 888-688-0334 or schedule an appointment below. When scheduling an appointment, use the email address associated with your retirement account.