| Options |
Pros |
Cons |
| Taking Your Savings in Cash |
- Immediate access to a portion of your money
|
- Your savings no longer grow tax-deferred
- A 10% early withdrawal penalty that generally applies to people under age 59½
- Subject to all applicable federal, state, and local taxes
- Without compounded growth you may compromise your wealth in retirement
|
| Rolling Your Savings into an IRA |
- Your money continues to grow tax-deferred
- Avoid the 10% early withdrawal penalty if you're under age 59½
- Additional investment options may be available.
- Your retirement assets are consolidated
- You control how to access your savings
- Flexibility to move your IRA rollover assets into a future employer's plan
- Potential to convert your assets to a Roth IRA in the future
|
- No immediate access to full amount of account
- Distributions must begin at age 70½
- Tax-deferral on future earnings of after-tax assets (if applicable) ends—Beginning on January 1, 2002, after-tax contributions to a qualified plan may be rolled into an IRA, if certain requirements are met
|
| Keeping Your Savings in Your Previous Employer's Retirement Plan, If Allowed |
- Your money continues to grow tax-deferred
- Avoid the 10% early withdrawal penalty if you're under age 59½
- Little or no paperwork
- Asset allocation strategy remains intact
- May allow you to withdraw money without penalty1
|
- The plan may place limitations on inactive or retired participants' accounts (e.g. loans)
- Investment options are limited to those offered in the plan
- Withdrawals and distributions are subject to the plan's provisions
- The company may be acquired and/or change its plan in the future
|
| Moving Your Savings Into Your New Employer's Retirement Plan |
- Your money continues to grow tax-deferred
- Avoid the 10% early withdrawal penalty if you're under age 59½
- New plan may allow loans
- Investment options and features may improve compared to the old plan
- Your retirement assets are consolidated with one provider
|
- The new plan may have higher fees than the old plan
- Your investment options are limited to those offered in the plan
- Withdrawals and distributions are subject to the plan's provisions
|
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