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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.
 
 
Davis Personnel, Inc.
3030 Windwood Trail
Fort Wayne, IN 46845
(260) 637-6756
 
 
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