WHEN you leave a job, sometimes it could mean forgetting to transfer your retirement account which you paid into while with your former employer.
Thousands of dollars can be in your 401K account, so it’s important to transfer it when you exit.
The pandemic and life post-pandemic has led people in search for more money, more flexibility and more happiness.
In the third quarter of 2021, 50.3% of US adults 55 and older said they retired, according to a Pew Research Center study.
The rise in resignations has been dubbed The Great Resignation.
A trend, primarily in the US, which has been going on since Spring 2021 where employees are voluntarily leaving their jobs.
The Labor Department reported 4.4million Americans left their jobs in September 2021 alone.
Whether you switch jobs or resign, it’s good to know what you should do with the money you earned from any employer-sponsored retirement plan.
The process of moving funds is called a rollover.
If you have an employer-sponsored retirement plan that needs to vest, you may want to wait to quit your job to ensure you get all the matching funds you can.
When you start at a job, you can keep the money with your old plan, transfer it to a new plan with your current employer or put it into an individual retirement account (IRA).
Make sure you’re aware of deadlines. There could be penalities if you don’t move your money within a certain time.
If you take an early withdrawal before the age of 59 1/2, you may be subject to a 10% tax penalty by the Internal Revenue Service (IRS).
After you pay the penalty and the regular income tax, you may not have as much left as you had hoped.
You can usually take a distribution from your retirement account, without penalty, as along as you reinvest in another similar retirement account within 60 days.
Also, you can leave your retirement account where it is, you just don’t want to forget about the money.
If you have forgotten where you have your retirement accounts, start with listing your previous employers and check what company they used for their retirement plans.
If you’re over the age of 60, it’s a good idea to start consolidating your accounts.
If you’re older than the age of 72, it’s good to have one account to avoid complicated required minimum distributions.
If you lose track of your 401K and fail to take the minimum distribution, it can result in a penalty.
You can search the National Registry of Unclaimed Retirement Benefits for a list of lost of unclaimed accounts.
We explain further about individual retirement accounts and the penalties you could be hit with.
Plus, when Social Security benefits start and stop.
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