Stay in your old plan
If you’re undecided about what to do with your retirement plan account when you leave your job, keeping it where it is may be a temporary solution.
Check with your employer to review how your plan works.
Benefits of staying in the plan
Leaving your assets in the plan while you explore your options allows you to:
- Keep tax advantages. As long as you keep your assets in the plan, you’ll benefit from certain tax advantages. Your account can continue to grow tax-deferred. Roth accounts provide the potential for tax-free distributions.
- Avoid taxes and penalties. By not cashing out, you won’t have to pay taxes or early withdrawal penalties.
- Stay invested. If you’re satisfied with your plan’s provider, you can keep your assets in the same investments.
Things to keep in mind
- You can’t contribute. Because you’re no longer an employee, you’re not eligible to continue making contributions to that account.
- Your choices are limited. Your investment choices are limited to what is offered in the plan.
- The old rules still apply. Keeping your account in the plan means you’re still subject to its rules. Your ability to choose investments, make exchanges between investments or make withdrawals may be restricted. Also, you’ll generally have to take required minimum distributions when you retire or reach age 70-1/2, whichever is later. However, you can avoid RMDs if you qualify to roll your money into a Roth IRA. Rollovers from non-Roth accounts are taxable, however.
- Your balance could be cashed out or rolled into an IRA. If your account balance is $1,000 or less at any time after you leave your job, your employer may automatically cash you out unless you elect another option within a certain time period. If your balance is between $1,000 and $5,000, your balance may be rolled into an IRA selected by your employer. Ask your benefits department about your plan’s rules.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional or downloaded and should be read carefully before investing.