REQUEST 401(k) GUIDE

Your 401(k) may be the bulk of your retirement savings, but as you prepare to say goodbye to your current workplace, are you making the #1 mistake…leaving your 401(k) behind?

For years you’ve contributed your hard-earned money building a 401(k) with the goal of being comfortable in retirement. Your 401(k) may be the bulk of your retirement savings, so wouldn’t you agree you should know what options are available? And of the available options, which one is best for you and your unique circumstances?

When you leave an employer, you have four options for your 401(k).

Taking a cash distribution
Keeping your 401(k) with your former employer
Roll your 401(k) over into your new employer’s plan
Roll your 401(k) into an Individual Retirement Account (IRA)

Taking a cash distribution –

This can be ESPECIALLY harmful as the distribution will be added to your ordinary income and taxed at your current tax rate. Depending on the amount in your 401(k), the distribution could push you into a higher tax bracket.

In addition to causing a taxable event, taking a lump sum distribution may also subject you to early withdrawal penalties from the IRS.

Keeping your 401(k) with your former employer –

This could be a good option, but only in certain situations and only if your former employer permits it. If available, this option allows your earnings to continue tax-deferred until you withdraw them.

There are, however, several reasons this may not be in your best interest. As you are no longer an employee, you aren’t able to contribute to the old plan or receive company matches. Also, leaving your money in your old plan may limit your investment choices and transferring assets among funds may be very difficult. Finally, with little to no guidance from the plan administrator, you are left to manage your 401(k) on your own.

Rolling over to your future employer’s 401(k) –

If you plan to work beyond age 72 and your new employer allows immediate rollovers into its 401(k) plan, this option has merit. According to current IRS regulations, this option would allow you to delay taking required minimum distributions from your current 401(k) plan which would include funds rolled over from your previous 401(k) plan.

Limited investment choices could be the biggest disadvantage of rolling your old 401(k) into your new 401(k) plan. With this option, the entirety of your retirement savings will be subject to those limited choices. And as is the case with most 401(k) plans, there is little to no individualized advice or guidance available from plan administrators.

Rolling over your 401(k) to an IRA –

Rolling your 401(k) into an IRA has repeatedly proven to be the most beneficial option. Rolling your funds into an IRA allows you far more investment choices not available in your former or new 401(k) plan while still giving you tax deferral benefits. With a small handful of exceptions, IRAs allow virtually any type of asset: exchange traded funds, stocks, bonds, mutual funds, REITs and annuities.

Another advantage to establishing an IRA is the ability to consolidate several retirement accounts into a single IRA to simplify management.

Over the years we’ve met with many people in the midst of a job change and we have heard over and over again…

“I can’t remember the last time my plan representative called me, I’m NOT a financial planner, I have no idea what I’m doing, I need help, and this is way too important to leave to chance!”

At Global Financial Trust we feel it’s important for you to understand the benefits and limitations of your available options. We work to learn what’s important to you, help you work through all of your options, create a holistic plan specific to your unique situation, and offer hands-on customer service. We care, YOU matter.

Don’t gamble with your 401(k), and when you consider you have the potential t spend between 20 and 30 years in retirement, wouldn’t you agree that efficiently and effectively managing your retirement savings now is crucial to your success later on? Afterall, it’s better to be 10 years early than 1 day late.

Don’t leave your retirement behind, contact us today to discuss your options at

(616) 956-9900

or email James Moran at invest@globalfinancialtrustinc.com

or CLICK THE LINK BELOW for more information or to download our Guide to Understanding Your 401(k) Options.