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What options do you have when you change jobs? Some people think that if they change jobs they have to take the funds out of the plan and pay heavy taxes (and in some cases, penalties) to the government. This is not your only option. In fact, that is probably your worst option.
Other options to consider when you change jobs as it pertains to your retirement funds:
Leave it in the plan of the company you left
- You might be happy with your investments offered and fees could be lower than other options
- If your balance is over $5,000 you can leave it in the plan
- One factor to consider when thinking about this option: check to see if the plan forces terminated participants to pay fees (sometimes the company pays a larger portion for current employees but once terminated you could have to pay the full fees)
Roll it over to your new company’s plan
- The majority of companies allow the rollover of funds into their plans
- Ask your new HR person if their plan allows incoming rollovers
Roll it over to an IRA in your name
- If you don’t want to leave the funds in the plan where you formerly worked and your new company plan won’t accept a rollover, look into setting up an IRA that you could roll the funds into.
In summary, when you get a new job, while this is an exciting time, don’t forget about your retirement funds and smart planning in that area.
Jennifer Hildebrand