RETIREMENT PLANNING : : Changing Jobs
Making a Career move... Don't Forget Your Retirement Savings!
If you decide to leave your current job due to better job opportunity, consider how this will affect your retirement plan. You have very important decisions to make before you go, so as to keep your retirement savings intact. Consider these factors, before or while making that job switch :
- How will this affect my retirement plan?
- What happens to my old retirement plan?
- I've been saving, but what do I do until I can start in my new company's plan?
- What happens to my group health and life insurance?
- What are you going to do with your retirement savings?
The money from your previous employer's retirement plan may be one of your largest assets. Based on the type of retirement plan you had with your previous employer, there are a few options available that will allow you to preserve your retirement savings.
Option 1 : Keep Your Money in the current Retirement/Pension Plan
There's nothing wrong with keeping your savings where it is if you're happy with the plan at your old job. However, while you can't make additional contributions to that plan, you can let your savings continue to grow for you until you reach retirement age and begin making withdrawals.
Option 2 : Cash out your savings
This may seem as the most tempting choice, especially since you will have the money ready to spend or invest as you would like. However, you may have to pay taxes on a cash distribution and you may also have to pay a penalty for early withdrawal.
In short, it is important to consider the above when making the decision of what to do with your retirement savings when changing jobs. The complex issues and choices involved require careful thought as well as advice from a licensed advisor.