Leaving Your Job? What Should You Do With Your 401(k)?
When you separate service from an employer, you have to make decisions with regard to your 401K plan. It’s important to understand the pros and cons of each option while also understanding that the optimal solution often varies from person to person based on their financial situation and objectives. The four primary options are:
1) Leave it in the existing 401(k) plan
2) Rollover to an IRA
3) Rollover to your new employer’s 401(k) plan
4) Cash Distribution
401(K) Cash Distributions: Understanding The Taxes & Penalties
When an employee unexpectedly loses their job and needs access to cash to continue to pay their bills, it’s not uncommon for them to elect a cash distribution from their 401(K) account. Still, they may regret that decision when the tax bill shows up the following year and then they owe thousands of dollars to the IRS in taxes and penalties that they don’t have.
401K Loans: Pros vs Cons
There are a number of pros and cons associated with taking a loan from your 401K plan. There are definitely situations where taking a 401(k) loan makes sense but there are also number of situations where it should be avoided.
