Topic: Resignation/Counter Offers

New Job? Be Sure To Protect Your Retirement Savings

(NAPSI) - One of the most important considerations during an employment transition is to protect the tax-deferred status of your retirement savings.

Even a small amount of money accumulated over several years on a tax-deferred basis can provide a significant amount of future income, notes a spokesperson from Diversified Investment Advisors, a national investment advisory firm.

Although withdrawing your account balance may seem like the easiest option, a substantial portion of your money might be spent on taxes and IRS penalties if you elect a full withdrawal. By taking money out of a qualified retirement plan, your withdrawal could be subject to ordinary income taxes and, if you're under age 59-1/2, an additional 10 percent early withdrawal penalty by the IRS. You also could find yourself in a higher tax-bracket.

If you choose not to withdraw your account balance, there are various options that may be available to you:

  • Funds on Deposit - One of the easiest options is to leave your tax-deferred money right where it is - in your current employer's retirement savings plan (if your account balance is more than $5,000).
  • Rollover to an IRA or another plan - You may roll over your assets to an IRA with a financial institution of your choice, or roll over or transfer to your new employer's plan (check eligibility requirements for the new plan).
  • Annuities - You may elect to receive a guaranteed fixed monthly payment for your life, or for a certain period of time, or both. Some annuities offer continuing payments to your surviving spouse in the event of your death.
  • Lump Sum Distribution - You may elect to receive your entire account balance in a single sum. This amount may be subject to mandatory 20 percent federal tax withholding and IRS penalties depending on your age.

This article appeared in the July 21,1999 Columbus Dispatch.

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