Newsletters

Moving On and Rolling Over

By May 28, 2013February 28th, 2014No Comments

Despite the uncertainties of the job market, today’s workers stay in a job for an average of only 4.4 years. Job-hopping is even more prevalent among younger workers: about nine out of 10 millennials (born between 1977 and 1997) expect to stay in a job for less than three years.¹

The impact of moving from job to job on a worker’s career depends on individual circumstances. However, any time you leave a job — whether you’ve been there for three years or 30 years — you could be faced with a decision about what to do with the savings in your employer-sponsored retirement plan. There are typically four options.

Leave the savings in the account

If your employer allows you to retain the account, this strategy might make sense as long as fees are low and you are satisfied with the investment options. Keep in mind that you will no longer be able to contribute to the account, and it could be bothersome to receive multiple retirement account statements.

Transfer assets in a former employer’s plan to a new employer-sponsored retirement plan (if allowed)

This might be a better option than leaving assets in your former employer’s plan. Again, your decision may depend on the available investment options and expenses.

Roll the funds to an individual IRA

Moving your savings to your own IRA enables you to control the money, regardless of how many times you change jobs. It could also expand investment opportunities because IRAs typically have more investment options.

If you choose an IRA rollover, be sure it is executed properly if you want to preserve the tax-deferred status of the funds. You can generally do this through a direct rollover, also called a trustee-to-trustee transfer. You can arrange this by contacting the administrators of your old employer-sponsored account and your traditional IRA. There is no withholding, and the money never passes through your hands.

If you receive a check, you must roll the entire distribution (including 20% federal income tax withholding) to your IRA within 60 days or it will be considered a taxable distribution.

13053_chart

Withdraw the money

This is generally unwise because you would also lose out on potential tax-deferred growth that you might need for retirement. In one study, 55% of people who took distributions when changing jobs said they regretted the decision.² Distributions from employer-sponsored retirement plans and traditional IRAs are taxed as ordinary income and may be subject to a 10% federal income tax penalty if taken before age 59½ (with some exceptions).

Choosing what to do with the savings you have accumulated in your employer-sponsored plan can be complicated, and you may benefit from professional guidance. Although there is no assurance that working with a financial advisor will improve investment results, a professional who focuses on your overall objectives can help you consider options that could have a substantial effect on your long-term financial situation.

1) Forbes, August 14, 2012
2) AdvisorOne.com, January 26, 2012

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2014 Emerald Connect, LLC
© Mahoney Asset Management

INVESTING RISK DISCLOSURE
Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Before investing, consider the funds’ investment objectives, risks, charges, and expenses. Contact Mahoney Asset Management for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

IMPORTANT CONSUMER INFORMATION
This web site has been prepared solely for informational purposes. It is not an offer to buy or sell any security; nor is it a solicitation of an offer to buy or sell any security.This site and the opinions and information therein are based on sources which we believe to be dependable, but we can not guarantee the accuracy of such information.

Representatives of a broker-dealer or investment adviser may only conduct business in a state if the representatives and the broker-dealer or investment adviser they represent: (a) satisfy the qualification requirements of, and are approved to do business by, the state; or (b) are excluded or exempted from the state’s licenser requirements.

An investor may obtain information concerning a broker-dealer, an investment advisor, or a representative of a broker-dealer or an investment advisor, including their licenser status and disciplinary history, by contacting the investor’s state securities law administrator.

The financial calculator results shown represent analysis and estimates based on the assumptions you have provided, but they do not reflect all relevant elements of your personal situation. The actual effects of your financial decisions may vary significantly from these estimates–so these estimates should not be regarded as predictions, advice, or recommendations. Mahoney Asset Managment does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences.

SECURITIES: ARE NOT FDIC-INSURED/ARE NOT BANK-GUARANTEED/MAY LOSE VALUE
This information is intended for use only by residents of CA, CT, DC, FL,, MA, MD, MN, NC, NJ, NY, OH, PA, and VA. Ken Mahoney may only conduct securities business with residents of the states and/or jurisdiction for which they are properly registered.

Securities offered through Newbridge Securities Corporation, member FINRA, SIPC.
Investment Advisory services through NFSG Corporation an SEC Registered Investment Advisor.
Office of Supervisory Jurisdiction: 1200 N. Federal Hwy., Ste. 400, Boca Raton, FL 33432. Phone 954.334.3450 Fax 954.489.2390

Specific recommendations can only be based on review of a number of suitability factors including but not limited to the investors financial profile, investment objectives, risk tolerance and the investors review of appropriate offering documents. Past performance is no guarantee of future results. To help you make informed decisions, we provide you with essential disclosures, such as Regulation Best Interest (Reg BI), the Client Relationship Summary (CRS), and Form ADV. Linked sites are strictly provided as a courtesy. Newbridge Securities, Inc. does not guarantee, approve nor endorse the information or products available at the sites, nor do links indicate any association with or endorsement of the linked sites by Newbridge Securities.