Have you recently changed jobs? You may be wondering what to do with your 401(k) plan account. Luckily you have options which we will help you understand.
What Will I be Entitled to?
If you leave you job (voluntarily or involuntarily) you will be entitled to a distribution of your vested balance. Your vested balance always includes your contributions and any investment earnings on those amounts as well as your employer contributions.
Don’t Spend it, Roll it!
While it may be tempting to take this pool of money, do not spend it unless you need it. If you take a distribution you will be taxed at ordinary income tax rates on the entire value of your account except for any after-tax or Roth 401(k) contributions you have made. And if you are not 55 an additional 10% penalty may apply. Rolling the money over is the most sensible option.
Should I roll over to my new employer’s 401(k) plan or to an IRA?
If you have both options, there’s no right or wrong answer to this question. Weigh all the factors and make a decision based on your own needs and priorities. This is the time to talk to a professional. Standard Financial Services can help you make the right choice. Our team of trusted financial advisors can help with this situation as well as planning for your future.