Retirement rollovers – you can take it with you | VailDaily.com
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Retirement rollovers – you can take it with you

Jeffrey Apps and Tracy Tutag

Americans are on the go, not only in their leisure pursuits, as evidenced in our valley, but in their jobs as well. The average U.S. worker switches jobs about every four years, according to the U.S. Department of Labor. If you are preparing to change jobs, do you know what your choices are for managing the money in your company’s retirement plan? Many people choose to take the cash distribution, complete with taxes and penalties, others assume that their former employer is managing that money for them. With so many people moving in and out of this area, we get questions regarding retirement accounts quite frequently. Here are some options to consider.Uncle Sam loves a cash distribution! Taking that lump-sum cash distribution may seem tempting but consider that it may trigger an immediate 20 percent federal withholding tax. In addition, a 10% federal tax penalty may apply if you are younger than age 55*. Taking your money in cash also means that you’ll no longer enjoy the potential benefits of tax deferral that a qualified retirement plan offers.Depending on your circumstances, you may have several options to consider that allow you to maintain the tax-deferred status of your retirement plan assets.1.Leave the money in your former employer’s plan. Most former employer must allow you to leave the money where it is as long as the balance exceeds $5,000. You’ll no longer be able to contribute to the account, but you may still decide how the existing assets are invested if you communicate with their representative.2.Roll over the money to your new employer’s plan. By “rolling” the money directly to your new plan you will not be subject to the taxes that occur with a cash distribution. You’ll have a consolidated retirement account that will be limited only by the plan provisions of your new employer. Even if you’re not immediately eligible to contribute to the plan at your new job, you may still be able to roll over the money right away.3.Roll over the money to an IRA. You can “rollover” your retirement money from your former employer(s) directly into a traditional IRA. This does not subject you to taxes or penalties and allows you to choose from a variety of investment options, separate from your former, current or future employers. Research your options. If you plan to change jobs, you may not want to “take the money and run”, although a new pair of skis or a snowboard might be tempting. Since rules vary from company to company, find time to explore your alternatives. If you have specific questions about your retirement plan distribution options, contact your employer’s benefits coordinator or a qualified financial advisor. If you are between jobs, ask a financial advisor about contributing to a Roth IRA. *If you’re age 55 or older and separated from service, and upon meeting certain requirements, the 10% penalty may not apply for lump-sum distributions taken from an employer-sponsored retirement plan. Keep in mind that the 10% penalty may be incurred on distributions taken from an IRA prior to age 59 _. Jeffrey Apps & Tracy Tutag offer securities and investment advisory services through AXA Advisors, LLC (member NASD, SIPC) 1290 Avenue of the Americas, New York, NY 212-314-4600 and offers annuity and insurance products through an insurance brokerage affiliate, AXA Network, LLC and its subsidiaries. They can be reached at 926.0601 or tracy.tutag@axa-advisors.com.Vail, Colorado


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