Reviewing Your Retirement Plan Distribution And Rollover Options?
We Can Help!
During your company’s transition, you have the ability to:
Roll the money over to your new employer plan
Roll to an IRA
Understanding Your Choices
The money contributed to and accumulated in your company’s retirement plan has enjoyed the advantage of tax-deferred growth. Now, several options are available to you. However, first compare your current retirement plan account to the alternatives. By remaining in your former employer’s plan, you may be offered lower-cost investments as tax-deferred growth continues. Understand your previous plan’s investment options may be greatly reduced and the service (or lack thereof) will likely be the same. You won’t be allowed to contribute new money, and your investments will be governed by the plan rules of your former employer. Stifel can help you evaluate your alternatives, but it’s also important to note that your decision may have tax ramifications, so please consult your professional tax advisor or CPA to assist with tax advice and guidance. Let’s dig into your options:
Roll the money over to your new employer plan – Rolling over to your new employer’s plan allows you to contribute new money, may offer lower-cost investments, and may continue tax-deferred growth. However, if you elect this option, you may not have access to the funds until a triggering event happens, such as separation of service. Typically, you are limited to the plan’s fund lineup, and it could eliminate certain strategies, such as net unrealized appreciation of your former employer’s stock. Most plans will take cash in the rollover but not the investment options from the previous employer’s investment line up.
Roll over to an IRA – Rolling over to an IRA allows you to contribute new money and may allow you to receive professional guidance from a financial advisor. This option may allow you more investment options, such as stocks, bonds, mutual funds, exchange traded funds, and other strategies. It also allows the opportunity for continued tax-deferred growth. However, certain strategies may be eliminated, such as net unrealized appreciation of employer stock or penalty-free plan distributions at age 55.
Cash out – Do you absolutely need the money right now? While cashing out allows for immediate access to your money, it is important to know that ordinary income tax will be applied along with a potential 10% penalty if you are under age 59 ½ (or age 55 when separated from service). There is also a potential loss of future tax-deferred growth, and those dollars cashed out for other purposes won’t be available for your retirement. Regardless of the size of your account, once withdrawn, those assets stop growing. It’s important to understand how this option may impact your taxes and retirement.
Decisions to roll over or transfer retirement plan or IRA assets should be made with careful consideration of the advantages and disadvantages, including investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment, and your unique financial needs and retirement planning. Neither Stifel nor Stifel Financial Advisors provide recommendations with respect to rollovers from an employer-sponsored retirement plan. Once you inform your Stifel Financial Advisor that you have chosen to roll your retirement assets to an IRA with Stifel, your individual investment needs can be addressed. You should consult with your tax advisor regarding your particular situation as it pertains to tax matters.
Choosing the Right Investment Strategy
If you intend to complete a rollover, careful consideration should be given to how your rollover will be invested. With a Stifel brokerage or advisory services IRA, your retirement assets can be invested according to a plan designed specifically for you.
A Stifel IRA provides you with the versatility and freedom to choose the investment vehicles best suited to your financial needs. Your goals and timeframe until you start taking distributions will determine whether you choose CDs, mutual funds, bonds, money market instruments, stocks, or annuities in your IRA.
With more than 130 years of knowledge and service, Stifel can assist you in developing a financial plan by selecting appropriate investments or an advisory program to address your individual needs.