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Retirement Plan Rollover - Finding the Best Option for You

Employer-sponsored retirement plans are one of the best ways to accumulate retirement savings. But what happens when you change jobs? Unless you take action, you may find yourself with numerous 401(k) accounts. Knowing your options when you change employers will help ensure you make a wise decision.

When changing jobs or retiring, you usually have four options:

1.) Leave Assets in the Old Employer's Retirement Plan

Many 401(k) plan administrators charge record-keeping and other fees to manage your account, regardless of whether you are still with the company. Keeping track of the fees and allocations of retirement accounts can be challenging, especially if you have accounts maintained at several different employers.

2.) Complete a Rollover to the New Employer's 401(k) Plan

In some cases, a rollover IRA may be the best option for the sake of simplicity. How do you know if it is the right choice? The decision should be largely based on the investment options of the new 401(k) plan. If you are unsatisfied with the choices available to you, completing a 401(k) rollover to an IRA may be a better option.

3.) Complete a Rollover to an Individual Retirement Account (IRA)

Completing a rollover is almost always the best choice for those interested in combining retirement assets and continuing tax-deferral while providing maximum control over asset allocation (i.e., you aren't limited to the investments offered by the 401(k) plan provider.) One of the biggest benefits of rolling over to an IRA at a bank, credit union, or brokerage house is that you gain local control of your retirement funds. Instead of calling an 800 number in some far-away city for service, you can work with a local professional who can deliver personalized service. When requesting a rollover, please note that the government limits rollovers to once every twelve months.

4.) Cash Out the Proceeds, Incur Taxes and Possibly a 10% Penalty Fee

With the exception of failing to take advantage of an employer's contribution match program, cashing out a 401(k) when leaving jobs may be the worst decision a working individual can make. According to the 401(k) Help Center, research indicates that "as many as 66% of Generation X job changers take cash when leaving their jobs, and 78% of workers aged 20-29 take cash." The loss can be far greater than those associated with taxes and penalty fees. The greater financial loss may come from the missed opportunity associated with decades of tax-deferred growth that may have resulted had the account owner chosen to initiate a 401(k) rollover.

Assistance Awaits You

Our CFS* Financial Advisor, Stephen Seewer, is available to review your retirement accounts and help facilitate rollovers if it makes sense for you. SF Fire provides Advisor-assisted investment solutions and meeting with our Stephen is complimentary. Contact Stephen to set up a no-cost, no-obligation consultation at (415) 674-4846 or

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (CFS), a registered broker-dealer (Member FINRA / SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. SF Fire Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.