Expert Contributor by Ryan Gray Oppenheimer & Co.
What to Do with Your 401(k) When You Change Jobs Changing jobs is a very big decision that most of us will make more than a few times in the course of our career. There is a lot that goes into leaving your job but when the dust has settled many overlook what they should do with the retirement money that has accumulated at their prior place of employment. It is important to consider and discuss all of the options to decide what is best for you. There are risks, fees and taxes that you will want to make sure to address.
The first option that may be available to you is to leave the assets within your old employer’s plan. Logistically this may be the easiest. It is important to analyze the investment options and in-plan fees to see if this is a suitable vehicle for your assets. Rolling over your account to an IRA or Roth IRA is a popular choice. These tax advantaged accounts will typically give you more investment freedom and allow you to consolidate multiple retirement accounts in one spot. You will need to decide if an IRA or Roth IRA makes more sense for you. Care should also be taken in how the assets are moved from your 401(k). Directly moving them from one financial institution to the other is the most direct and least risky option. The least desirable option for most is to cash out the account. If you are not yet 59½ years of age this will likely trigger income taxes and a 10% early withdrawal penalty. Some choose to cash out their plan because they feel the balance isn’t enough to matter. Even small balances can add up when taking into account compounding and the tax advantages of retirement accounts. Employees who have accumulated company stock in their 401(k) should also consider a tax break that they may be able to take advantage of. The tax treatment of net unrealized appreciation may make it beneficial to move the shares to a taxable account and pay taxes on the cost basis of the shares. There are many factors to consider when thinking about this option including but not limited to age, time horizon and appreciation of the shares. Starting a new job is often an exciting time for you and your family. As you should with any significant life changes please take the time to discuss your options with an advisor so you have all of the information to make the best choice for you and your family. NS
From the Air Answer (pg. 20): The construction site in Marple Township at the coming Mid-County Shopping Center, West Chester Pk and 476, shows the advantage of a new “Giant” supermarket coming to Marple Township. 30
Newtown Square Friends & Neighbors
November 2019
