If this sounds like you, we can help!
We can help you understand your retirement plan options and consider the potential advantages and disadvantages of each option before making a decision. Let's dig in.
Remain in the former employer’s plan
By remaining in your former employer’s plan, you may be offered lower-cost investments and tax deferred growth may continue. Your investment options will still be limited to those offered by the plan, and the service (or lack thereof) will likely be the same. You won’t be allowed to contribute new money, and your investments will be governed by the plan rules of your former employer.
Roll the money over to your new employer plan
This is only an option if your new employer offers a retirement plan and that plan permits rollovers. Rolling over to your new employer’s plan allows you to contribute new money, may offer lower-cost investments, and provides the opportunity for continued tax-deferred growth. You are typically limited to the plan’s fund line up; however, if you elect this option, you may not have access to the funds until a triggering event happens, such as separation of service.
Rollover into an IRA
Rolling your assets to an IRA allows you to contribute new money, and you may choose to get professional guidance. This may allow you more investment options, such as stocks, bonds, mutual funds, exchange traded funds (ETFs), and other strategies. This also allows the opportunity for continued tax-deferred growth. People that prefer more control and flexibility over their money oftentimes will use an IRA to consolidate former employer retirement plans.
Do you absolutely need some or all of the money? Cashing out allows for immediate access to your money, and you may be taxed at your ordinary income tax rate and possibly a 10% penalty if you are under age 59 ½ (or age 55 when separated from service). Those dollars cashed out for other purposes won’t be available for your retirement – if you are considering this option, please consult with your tax advisor, as this can be a very expensive option.
Stock purchase plan
If you have been buying company stock through a payroll deduction, you can simply transfer the stock to a single or joint after-tax account. You can continue to hold the stock, allow for the dividends to be reinvested, or sell some or all and diversify. Consult with your tax advisor on potential capital gains that may be taxed. You have options besides letting it sit with your former company.
Executive savings plan
If you have an executive savings or deferred compensation plan, we will review the plan specifics and distributions options with you. Depending on your elections, your account size, and plan rules, we can help you understand how this cash flow may affect your financial situation.
Does this sound like it is a difficult decision? It doesn’t have to be!
We are a full service wealth management group with more than 45 years of combined financial services experience. Whether you decide to work with a new company, work part time, or retire, we can develop a personalized investment strategy that pulls together all your resources and how they can work for your future goals.
We are here to help so you can start focusing on your next career move! Our clients live busy lives. Let us do the heavy lifting so that you can spend more time doing the things you most enjoy. Our goal is to give you the freedom to love life on your terms, to spend time with loved ones, and to pursue your passions and dreams.
Kletschke Wealth Management Group
700 4th Street, Suite 100
Sioux City, Iowa 51101
Neither Stifel nor Stifel Financial Advisors provide recommendations with respect to rollovers from an employer-sponsored retirement plan or tax advice. Please consult with your tax advisor on any tax issues. Once you inform your Stifel Financial Advisor that you have chosen to roll your retirement assets to an IRA with Stifel, your individual investment needs can be addressed. Diversification does not ensure a profit or protect against loss.