CHANGING JOBS?
Many people who are changing jobs or approaching retirement are simply
too overwhelmed with other issues to focus on their 403(b) plans. But
the price of neglect can be steep. A lack of understanding or a failure
to fully evaluate the consequences can cost you thousands of dollars
in lost employer matches, additional taxes and penalties. Your StraightLine
advisor will help you examine your four options carefully.
OPTION 1: ROLL YOUR MONEY INTO AN INDIVIDUAL RETIREMENT ACCOUNT
(IRA)
If you roll the proceeds over into an Individual Retirement Account
(IRA), you retain all of the tax advantages that you currently enjoy
in your 403(b) plan. An IRA also gives you the opportunity to increase
your investment options. The investments continue to grow tax-deferred
and rules for the account's distribution are the same as those for
a 403(b) plan. StraightLine can set up and manage your IRA in the same
manner as your 403(b) plan.
OPTION 2: TRANSFER THE FUNDS INTO YOUR NEW 403(B) ACCOUNT
If your new employer offers its own 403(b) plan, you might be able
to roll your current account into the new one. (Not all plans allow you
to do this.) If your new plan accepts rollovers from other plans, you
must have the money transferred directly from your current plan to the
new plan to avoid potential penalties. If there's a waiting period for
participation, consider leaving your funds in your old employer's plan
until you're eligible under the new plan.
OPTION 3: LEAVE THE FUNDS IN YOUR CURRENT ACCOUNT
Often times there's nothing wrong with keeping the cash where it
is. If you have at least $5,000 in your 403(b) plan, most employers
give you the option of leaving your funds in your old plan. As long as
you're
satisfied with the performance of the investments and administration
of the plan, this can be a good option, especially if your new employer
doesn't
offer a 403(b) plan. One thing to keep in mind is that you can no longer
contribute additional funds to this account after you have left the
company.
OPTION 4: LUMP SUM DISTRIBUTION
It can be tempting to take your money all at once. But in nearly every
situation, this is the least desirable option because of taxes/penalties¹ and
the serious harm it will cause to your retirement nest egg. Contact us
to see if a lump sum distribution is appropriate for your situation.
LET STRAIGHTLINE HELP YOU DECIDE WHICH OPTION IS BEST FOR YOU
Sit down with a StraightLine advisor to discuss your options and ensure
you make the right choices for your retirement account. We'll analyze
your financial situation including years to retirement, additional assets,
risk profile and other factors to see which option is best for you.
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