Retirement Rollover

Making the Most of Your Retirement Rollover so you can Retire On Track!

Retire On Track LLC.

Millions of Americans change jobs or enter retirement each year.When you are one of these millions of Americans, you are faced with many important decisions. One of the most important decisions you will need to make is what to do with the money you have invested in your former employer's retirement plan.

You need to consider your options carefully. Your long and short term retirement goals must be kept in mind. A careful choice can keep your retirement plans on target. Each rollover option has both advantages and disadvantages. The table below explains your rollover options.

Rollover Options

Options

Advantages

Disadvantages

Direct Rollover to Your Own IRA

Your former employer transfers funds directly from your retirement plan into your IRA.

Investments can grow income tax deferred and avoid potential tax penalty.

More investment options.

May be eligible to roll over assets to new employer's plan.

May receive substantially equal periodic payments prior to age 59½ without 10% tax penalty, but subject to income taxes.

Certain investment options in your employer's plan may not be available in an IRA rollover.

Loans are not available from an IRA.

Direct Rollover to Your New Employer's Plan

You may be able to directly transfer the proceeds from your former employer's plan into a new plan. Check with your new employer to make sure that it will accept the transfer before you arrange for the rollover.

Investments can grow income tax deferred and avoid potential tax penalty.

Current federal income taxes and tax penalties are eliminated.

Loans may be available with new plan.

Limited investment choices.

Limited access to funds.

New plan restrictions are possible.

Indirect Rollover -Take cash and roll it over yourself into Your Own IRA

You may instruct your employer to pay the distribution to you in cash. You have 60 days from the date of distribution to roll it over into an IRA.

Temporary access to 80% of proceeds.

Investments can grow income tax deferred and avoid potential tax penalty.

More investment options.

May be eligible to roll over assets to new employer's plan.

May receive substantially equal periodic payments prior to age 59½ without 10% tax penalty, but subject to income taxes.

Employer is required to withhold 20% federal income tax on distribution.

You must make up the 20% withheld from own pocket.

Proceeds must be rolled over in 60 days to maintain tax-deferred status.

Amount not rolled over subject to income tax and possible tax penalty.

Loans are not available from an IRA.

Keep Your Current Plan

If balance is at least $5,000, you may have the option of leaving your assets in your former employer's plan.

Investments can grow income tax deferred and avoid potential tax penalty.

Same investment options.

Limited investment choices.

Limited access to funds.

Rights under plan may change.

Loans are not available.

NOTE: If you are over age 70½, you may be required to begin Minimum Required Distributions (MRDs) and may not be eligible for some options listed above.

You should consult with a qualified tax adviser or your financial advisor about your individual circumstances before making any tax-related investment decisions.  Making the right rollover decision will help to secure your dreams of a comfortable retirement.

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