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There are four basic options to consider when deciding what to do with your retirement account savings. The following chart summarizes each of your alternatives and explains the pros and cons.

Options Pros Cons
Taking Your Savings in Cash
  • Immediate access to a portion of your money
  • Your savings no longer grow tax-deferred
  • A 10% early withdrawal penalty that generally applies to people under age 59½
  • Subject to all applicable federal, state, and local taxes
  • Without compounded growth you may compromise your wealth in retirement
Rolling Your Savings into an IRA
  • Your money continues to grow tax-deferred
  • Avoid the 10% early withdrawal penalty if you're under age 59½
  • Additional investment options may be available.
  • Your retirement assets are consolidated
  • You control how to access your savings
  • Flexibility to move your IRA rollover assets into a future employer's plan
  • Potential to convert your assets to a Roth IRA in the future
  • No immediate access to full amount of account
  • Distributions must begin at age 70½
  • Tax-deferral on future earnings of after-tax assets (if applicable) ends—Beginning on January 1, 2002, after-tax contributions to a qualified plan may be rolled into an IRA, if certain requirements are met
Keeping Your Savings in Your Previous Employer's Retirement Plan, If Allowed
  • Your money continues to grow tax-deferred
  • Avoid the 10% early withdrawal penalty if you're under age 59½
  • Little or no paperwork
  • Asset allocation strategy remains intact
  • May allow you to withdraw money without penalty1
  • The plan may place limitations on inactive or retired participants' accounts (e.g. loans)
  • Investment options are limited to those offered in the plan
  • Withdrawals and distributions are subject to the plan's provisions
  • The company may be acquired and/or change its plan in the future
Moving Your Savings Into Your New Employer's Retirement Plan
  • Your money continues to grow tax-deferred
  • Avoid the 10% early withdrawal penalty if you're under age 59½
  • New plan may allow loans
  • Investment options and features may improve compared to the old plan
  • Your retirement assets are consolidated with one provider
  • The new plan may have higher fees than the old plan
  • Your investment options are limited to those offered in the plan
  • Withdrawals and distributions are subject to the plan's provisions

1. Must be age 59½ or have separated from employment in the year you reach age 55 or older.


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