Next week will be your final week at the job, you have know for thirty-five, twenty, or even ten years. Over the years you have watched your 401K grow and go down. So what is next? Free 401K Rollover Quote

Leave 401K in Company Plan

You could leave your 401K in your current plan at work. If you are at least 55 years old, the moment you are separated from your company, you will have access to your 401K without the 10% penalty for early withdrawals applying. You will still be able to take out loans against your 401K.

Disadvantages of leaving 401K at current employer

When you die, your spouse must liquidate the account within 5 years if not sooner. If beneficiary is not spouse usually account must be liquidated in reasonable and taxes are due. You may be subjected to limited choices of investment options.

Cash Out the 401K

Another option an individual has is to cash their 401K immediately and we are assuming you are at least 55 years old. You will be able to do with your money as you please, but of course you will be responsible for any taxes that you owe.

Roll Assets into a IRA

One of the main reasons to roll 401K assets into IRA is because of estate planning. Your spouse can continue the IRA or set up their own after your death. If he or she does not need the 401K assets, the individual can name your children or whoever as beneficiaries and upon the death of the spouse, continue the IRA as a "Stretch IRA." Instead of the beneficiary having to pay all of the income tax all at once, the beneficiary will be allowed to extend the paid benefits and taxes across their lifetime based on life expectancy.

Conclusion

You have several options when deciding what to do with 401K Plan. One solution does not fit all situations. It is important to evaluate the risk and reward carefully. Please contact your financial consultant.

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