401(k) Rollovers & Retirement Planning

When you leave a job

Whether you are changing employers or retiring for good, the money in your 401(k), 403(b) or other workplace plan is still yours. What changes is how it is managed, what it costs and what choices you have.

Decisions made at this point — especially about taxes — can be hard to undo. It pays to take your time and understand every option before anything moves.

Four choices for an old plan

1. Leave it where it is. Many plans allow this. It is simple, but you can only choose from that plan’s options, and it is easy to lose track of old accounts over the years.
2. Move it to your new employer’s plan. This keeps everything in one place, if the new plan accepts rollovers.
3. Roll it into an IRA. An IRA usually offers a wider range of choices — including products designed for protection and lifetime income — and makes it easier to combine several old accounts.
4. Cash it out. This puts money in your hands now, but it is generally taxed as income and may carry a 10% additional tax if you are under 59½, with some exceptions. It also shrinks your retirement savings.

Whichever path you choose, a direct rollover — where the money moves straight from one institution to the other — helps you avoid the 20% tax withholding that applies when a check is made out to you.

Building a retirement income plan

Saving is only half the job. In retirement, the big question becomes: where will each month’s income come from? We help you map out:

• Steady sources, such as Social Security and any pension.
• Savings and investments, and how much you can sensibly draw from them each year.
• Protected income options, such as annuities, that can cover essential bills for life.
• Healthcare costs, including Medicare premiums and coverage choices.

Seeing everything on one page makes it easier to decide when to retire, when to claim Social Security and how to protect yourself if the market falls early in your retirement.

How we help

We review your old plans with you, explain the costs and choices in plain English, and handle the paperwork for a careful, direct rollover when that is the right move. Then we help you build an income plan that fits your life, and revisit it as things change. Because we also help with Medicare and long-term care, we can make sure the pieces of your retirement fit together.

Things to consider

• Look for special features in your old plan, such as company stock, before moving anything — some come with tax rules worth knowing about.
• Compare costs and options honestly. Sometimes staying put is a reasonable choice.
• Keep beneficiary designations current on every account.
• Don’t rush. There is usually no deadline to move an old 401(k), so take the time to decide well.