From 401(k) rollovers to organizing your investments accounts, retirement decisions deserve careful consideration.
Your Retirement Distribution Options When Changing Jobs or Retiring
Deciding what to do with your retirement savings when you change jobs or retire is an important financial decision, and understanding your available options is a key part of making an informed choice.
When you become entitled to a distribution from an employer-sponsored retirement plan, you generally have four choices:
- Leave the money in your current plan (if permitted)
- Transfer it to a new employer’s plan (if allowed)
- Roll it into an individual retirement account (IRA)
- Take a taxable distribution
The first three options generally preserve the tax-deferred status of your retirement savings, while taking a distribution typically does not. Each of these alternatives has potential advantages and disadvantages, and none is right for every person in every situation.
Key considerations may include:
- The investment options available in your plan versus those in an IRA
- Fees and expenses, including whether any costs are paid by your employer
- Access to advice or retirement income planning services
- Distribution flexibility and whether periodic payments are available
- Creditor protections
- Required minimum distribution (RMD) rules
- Whether consolidating multiple accounts may simplify administration
Start a Conversation About Your Retirement Rollover Options
At Halbert Hargrove, we can help you understand your options and, where appropriate, provide guidance based on your individual goals and circumstances. Rollover decisions deserve careful review of your options to help determine which is most appropriate for you.
Talk with us about your retirement planning considerations. Request a retirement discussion today.
For Self-Directed (DIY) Investors
If you plan to manage your own investments, it’s important to understand how rollovers are processed. For example, a direct trustee-to-trustee transfer can help avoid unintended taxes and automatic withholding that may occur if funds are distributed to you personally and not redeposited within 60 days. Mistakes in completing rollover paperwork can result in taxable distributions and potential penalties.
Retirement Plan Distribution FAQs
What options do I have when I leave my employer or retire?
When you are eligible for a distribution from a retirement plan, you generally have four options. You may leave your money in the current plan, transfer it to a new employer’s plan, roll it into an IRA, or take a taxable distribution. The first three options typically avoid immediate taxation. Each choice has pros and cons to consider based on your personal situation.
What factors should I consider before rolling over a 401(k)?
Rollover decisions are specific to your goals and circumstances. Common considerations include the investment options and services in your current plan versus an IRA, fees and expenses, whether your employer pays any plan costs, withdrawal and distribution flexibility, creditor protections, required minimum distribution rules, and whether consolidating multiple accounts may simplify retirement income planning. It’s also important to understand potential conflicts of interest when receiving rollover recommendations.
Disclosure:
Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment adviser with its principal place of business in Long Beach, California. HH may only transact business in those states in which it is registered, notice filed, or qualifies for an exemption or exclusion from registration or notice filing requirements. Registration does not imply a certain level of skill or training. For information pertaining to the registration status of HH, please contact HH or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). Additional information about HH, including our registration status, fees, and services can be found at www.halberthargrove.com.
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