Changing Jobs?
Know Your 401(k) Options.

If you’re changing jobs, you may be wondering what to do with your 401(k) retirement plan. Here are questions you may want to ask yourself as you consider your options.

What will I be entitled to?

If you leave your job, you’ll be entitled to a distribution of your vested balance. Your vested balance always includes your own contributions, and typically investment earnings on those amounts. It also includes employer contributions and earnings. Check with your plan to understand your vesting schedule.

Don’t spend it.

While this pool of dollars may look attractive, don’t spend it unless you absolutely need to. If you take a distribution, you’ll be taxed at ordinary income tax rates, on the entire value of your account, except for any after-tax or Roth 401(k) contributions you’ve made. And, if you’re not yet age 55, an additional 10% penalty may apply.

What about outstanding plan loans?
In general, if you have an outstanding plan loan, you’ll need to pay it back, or the outstanding balance will be taxed as if it had been distributed to you in cash. If you can’t pay the loan back before you leave, you’ll still have 60 days to roll over the amount that’s been treated as a distribution to your IRA. Of course, you’ll need to come up with the dollars from other sources.

Should I roll over to my new employer’s 401(k) plan or to an IRA?
Assuming both options are available to you, there’s no right or wrong answer to this question. You need to weigh all the factors, and decide based on your own priorities.

Reasons to consider rolling over to an IRA:
You generally have more investment choices and distribution flexibility with an IRA than with an employer’s 401(k) plan. You typically may freely move your money around to various investments, and you may divide up your balance among as many of those investments as you want.

Reasons to consider rolling over to your new employer’s 401(k) plan:
Many employer-sponsored plans have loan provisions. If you roll over your retirement funds to a new employer’s plan, you may be able to borrow up to 50% of the amount you roll over. In contrast, you can’t borrow from an IRA — you can only access the money in an IRA by taking a distribution. However, you may also have less flexibility with investment choices if you roll over to your new employer’s plan.

Meet with a financial professional.
When changing jobs, you have choices. It’s important to meet with a financial professional to review all your options; the decision you make may have significant consequences both now and in the future.

©2023 Broadridge Advisor Solutions, Inc.

We can help!
Connect with your dedicated SPF* Financial Advisor today:

Michael Pugliese
Financial Advisor, Sorrento Pacific Financial, LLC.
(781) 320-4805
Or visit our Investments page for more information.

*Non-deposit investment products and services are offered through Sorrento Pacific Financial, LLC (“SPF”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through SPF are not FDIC or otherwise federally insured, are not a deposit or guarantee of the bank, and may involve investment risk including possible loss of principal. Investment Representatives are registered through SPF. The Bank has contracted with SPF to make non-deposit investment products and services available to bank customers.

Before deciding whether to retain assets in an employer sponsored plan or roll over to an IRA an investor should consider various factors including, but not limited to: investment options, fees and expenses, services, withdrawal penalties, protection from creditors and legal judgments, required minimum distributions and possession of employer stock.

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