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Advisors of Horizon are Registered Representatives of Cetera Advisors a broker/dealer and Registered Investment Adviser.

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  2. Options When Leaving an Employer

Mar 4, 2019

In this episode of Inside the Plan, Bill Bush and Andy Bush, Advisors at Horizon Financial Network, give us some valuable insight on which choices you can make for your 401K plan when leaving an employer. Learn the pros and cons on everything from withdrawing from your 401K plan too early, to rolling over your old plan into your new employer’s plan. 

 

Show Notes:

 

  • 0:57--- Some of what you can do when you leave an employer resides in the plans document.
  • 2:32--- What are the “pros” of leaving your money in a 401K after leaving an employer?
  • 3:39--- What are the downside of leaving your money in a 401K after leaving an employer?
  • 4:37--- What will happen if you cash out your 401K too early?
  • 6:14--- Rolling your old account into your new employer’s plan is an option.
  • 7:25--- What can be expected when you roll your old 401K into an IRA?
  • 8:45--- You are not going to be able to borrow against an IRA.

 

 

3 Key Points:

  1. Force Out provisions occur for 401K plans below $5000.
  2. You may be eligible to withdraw from your 401K penalty-free, depending on your age.
  3. Removing money from your 401K early means increasing your taxable income and a premature distribution penalty of 10%.

 

 

Before deciding whether to retain assets in a 401(k) or roll over to an IRA, an investor should consider various factors including, but not limited to, investment options, fees and expenses, services, withdrawal penalties, protection from creditors and legal judgments, required minimum distributions and possession of employer stock.  Please view the Investor Alerts section of FINRA website for additional information

 

Tweetable Quotes:

-       “Know your employer plan specifications. You can find that in the summary plan description usually.” – Bill Bush.

-       “Your going to have to keep up with more accounts if you still got that one at the old 401K.” – Andy Bush.

-       “Maybe their IRA is serving as kind of a basket of some of those old 401K tombstones, and its collecting all of those dollars into one spot. And, they likely have an advisor that is guiding them.” – Andy Bush.

 

 

Resources Mentioned:

 

 

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