Updated : Sep 29, 2019 in Articles

SA3 Wealth – Previous Employer Retirement


YOU’RE WATCHING IOWA LIVE ON CW CHANNEL TWENTY-THREE. GOOD MORNING, EVERYONE. IT’S TIME TO GET WISE WITH YOUR DOLLARS AND CENTS. A WISE MOVE FROM STEPHANIE. ALWAYS MAKING SURE WE’RE KEEPING TRACK OF THEIR MONEY AND ALSO SAVING IT AS WELL WHEN IT COMES TO 401K AND WHAT WE’RE DOING IN RETIREMENT. SHE’S BREAKING DOWN SOMETHING I’M PASSIONATE ABOUT COURTESY OF SA3-WEALTH. FOR MOST OF US, THERE’S SOME PEOPLE THAT HAVE THE SAME JOB AND KNOW WHAT’S HAPPENING AND ABLE TO TRACK EASILY. THERE’S OTHER THAT WE BOUNCE AROUND AND HAVE 401KS AND DON’T ALWAYS KNOW WHERE IT ENDED UP. HOW DO WE LOOK AT THAT TODAY? WELL, WE LOOK AT THE OLD EMPLOYER AND IF THEY’RE STILL IN EXISTENCE WE’LL SEE WHO IS HOLDING THE FUNDS. SO IT COULD BE WITH FIDELITY AND THERE’S MAJOR CUSTODIANS. SO THERE’S A VARIETY OF THEM. SO IF YOU DON’T KNOW WHERE YOUR ACCOUNT IS LISTED THEY CAN FIND IT UNDER YOUR SOCIAL SECURITY NUMBER. SO THERE’S A CHANCE THAT MONEY IS SOMEWHERE. SO WHAT ARE YOU DOING? YOU’RE JUST SITTING THERE — — WELL, IT MAY NOT BE WORKING INVEST HARD FOR YOU. I DON’T DOUBT IT IF YOU DON’T EVEN KNOW WHERE IT IS. ESPECIALLY IF IT WAS AROUND BEFORE YOU STARTED USING TARGET DATES. IT COULD BE HANGING OUT AND NOT REALLY WORKING HARD. WHY IS THAT IMPORTANT SO THAT WE CAN BE USING YOUR MONEY IN A SMART WAY. WELL, ABSOLUTELY. IF IT’S EARNING NEXT TO NOTHING AND IT’S SITTING THERE, THE OPPORTUNITY TO NOT HAVING IT WORK FOR YOU, THE RETURN IS GOING TO BE DIFFERENT FOR IT. IT COULD BE A FACTOR WHEN YOU FIGURE IN WHAT DO I HAVE TO FACTOR IN FOR YOU. AND IT COULD BE AN IMPORTANT CALCULATION TO SUPPLEMENT WHAT YOU HAVE SAVED. IN MOST CASES WHEN YOU LEAVE ONE EMPLOYER AND YOU GO TO ANOTHER ONE THERE’S STEPS THAT YOU LINE UP AND MOVE THAT NEW EMPLOYER IF YOU’RE SO INCLINED. YOU HAVE A FEW OPTIONS WITH YOUR EMPLOYER. IF YOUR AMOUNT IS OVER $5,000 IT’S BETTER TO LEAVE YOU WITH THE PLAN. IF IT’S UNDER $5,000, THEY CAN FORCE YOU OUT OF THE PLAN. SO WHAT ARE SOME PROS AND CONS? WELL, IF IT’S THERE YOU DON’T HAVE TO MOVE IT. DEPENDING ON A FEW STRUCTURES IT COULD BE CHEAPER THAN PUTTING IT IN AN IRA. THAT’S DIFFERENT FOR EVERY PERSON AND EVERY PLAN. SO WE LOOK AT WHAT’S THE PROS AND CONS OF LEAVING IT THERE? THE OPTION YOU HAVE TO DO IS A ROLLOVER. THERE’S A NEW PLAN TO ROLL IT INTO A GOOD MATCH OR IT’S AN INDIVIDUAL ACCOUNT. TEND TO HAVE MORE OPTIONS WITH THE IRA. SO WITH AN EMPLOYER PLAN, YOU CAN RESTRICT IT TO WHATEVER THE EMPLOYER PROVIDES. WHAT ARE THE MOST COMMON THAT YOU SEE? I SEE BOTH. I SEE WHAT YOU’RE LOOKING AT. IF IT HAS GOOD INVESTMENTS MAYBE THAT’S THE BEST CHANCE AND THAT’S THE MOST ECONOMICAL AND THEY’RE REASONABLE AND THEY HAVE GOOD ECONOMICS. IF THEY DON’T PLAN TO STAY THERE VERY LONG THAN MAYBE AN INDIVIDUAL RETIREMENT ACCOUNT WOULD MAKE MORE SENSE. IF THEY WANT MORE CUSTOMIZATION AND THEY WANT TO BE ABLE TO PICK AND CHOOSE DIFFERENT TYPES OF INVESTMENTS, AN IRA IS USUALLY THE BEST. ARE THERE ANY CONSEQUENCES IF YOU WANT TO EXTRACT THE FUNDS FROM YOUR EMPLOYER? SOME DO SOME DON’T. SOME JUST HAVE AN EXTRACTION FEE. I’VE SEEN $25-$100. SO IT’S NOT OUTRAGEOUS? NO, DEFINITELY NOT. SO THERE’S A CASH OUT OPTION. IT’S NOT THE BEST OPTION. IT’S HARD ENOUGH TO SAVE FOR RETIREMENT. CASHING OUT PUTS YOU THAT MORE BACKWARDS. AND IF YOU’RE UNDER A CERTAIN AGE YOU’RE GOING TO BE PENALIZED. AND WHAT MOST PEOPLE HAVE IS A 401 K PLAN AND THEY HAVE A PLAN PRIOR TO THREE AND A HALF. IF IT’S PRETAX IT WOULD BE ON A WHOLE DISTRIBUTIONS. IF IT’S ON A ROTH YOU WOULD HAVE IT WITH YOUR CONTRIBUTIONS THAT YOU PUT IN WOULD NOT BE SUBJECT TO 10% BUT THE CONTRIBUTIONS COULD BE. I DIDN’T REALIZE THAT. THE SMARTEST THING IS TAKE THAT MONEY AND HAVE IT WORK FOR YOU. YEAH, DON’T CASH IT OUT. A LOT OF TIMES IF YOU HAVE LESS THAN A $1,000. IF THEY DON’T CASH IT OUT FAST ENOUGH EMPLOYEE WILL CASH IT OUT. AND IF IT’S UNDER $5,000 THE COMPANY HAS THE ABILITY TO ROLL IT INTO AN IRA ON YOUR BEHALF. LOU: HOW LONG DOES IT TAKE YOU TO GET ESTABLISHED WITH SOMEONE ELSE? WELL, MOVING IT FROM AN OLD EMPLOYEE IS TRICKIER BECAUSE YOU HAVE MORE PARTIES INVOLVED AND YOU HAVE TO WORK WITH A LITTLE MORE ADMINISTRATION. IT MIGHT TAKE A LITTLE BIT LONGER THAN TWO WEEKS. BUT FOR ALL INTENTS AND PURPOSES. DOES IT DEPEND ON THIS TIME OF THE YEAR WHEN YOU DO THIS? IS IT CLOSER TO THE TAX YEAR OR NOT. WHETHER IT’S FROM YOUR OLD PLAN TO YOUR OLD PLAN TO THE IRA. IF IT GOES FROM THE OLD CUSTODIAN TO A NEW CUSTODIAN. IT’S A TAXABLE EVENT. IT DOESN’T MATTER WHEN YOU DO IT. THEY SHOULD BE ABLE TO ROLL INTO ANYTHING LIKE THAT. NO, THEY SHOULD BE ABLE TO COME OVER MANY TIMES OF YEAR. IF YOU DO CONSIDER TAKING A WITHDRAWAL ON IT, A 401K WILL HOLD TAXES. YOU ABSOLUTELY WILL HAVE TO COME UP WITH THE DIFFERENCE OUT OF YOUR POCKET AND GET IT BACK FOR SEASON. THAT’S CALLED AN INDIRECT ROLLOVER. YOU CAN DO THAT ONLY SO MANY TIMES A YEAR. IT DOESN’T MATTER HOW MANY TIMES YOU DO IT, YOU CAN ONLY DO THAT ONCE A YEAR. IT’S A LITTLE TRICKIER. ANY TIME YOU CAN DO A ROLLOVER IT’S IDEAL. SO CASH IT OUT AND SEND IT BACK TO YOURSELF IN 60 DAYS. SO IT’S IMPORTANT TO KNOW WHICH IS YOUR BEST OPTION. IF IT’S A 401 K OR AN IRA OR LEAVING WITH YOUR NEW PLAN, WE CAN EASILY ANALYZE IN A FEW MINUTES AND SOME PEOPLE DON’T KNOW WHERE TO BEGIN. THE MAJORITY OF PEOPLE KNOW WHAT’S IMPORTANT. AND WE GET INTO A PLAN AND SET IT AND FORGET IT. WE DON’T ALWAYS REALIZE IS IT WORKING THE BEST FOR ME. SO RESEARCH THE OLD PLAN TO MAKE SURE IT’S GROWING THE WAY IT SHOULD BE. SOMETIMES WORKING WITH A FINANCIAL ADVISOR IS LIKE WORKING WITH A FITNESS COACH. YOU KNOW WHAT YOU DO. SOMETIMES YOU NEED THAT ACCOUNTABILITY. JUST CHECK IT. WE’RE USUALLY TOO BUSY ON THE FOLLOW THROUGH. KNOWING YOU HAVE A SIX-MONTH MEETING OR A 3-MONTH MEETING REMINDS PEOPLE WHAT THEY NEED TO DO. IT’S GOOD TO HAVE A CHECKUP. AT LEAST TWICE A YEAR. SOME OF THEM I TALK TO THEM ON A MONTHLY BASIS. SOME OF THEM ARE QUARTERLY. IT DEPENDS ON WHAT YOU WANT TO DO. BUT YOU HAVE TO BE SMART WITH IT. SO IF PEOPLE WANT TO GET AHOLD OF YOU WHAT IS THE BEST WAY TO GET A HOLD OF NEW. OUR PHONE NUMBER IS ON THERE. WE DO FREE CONSULTATIONS AND IT’S NOT GOING TO COST MUCH TO LEARN WHAT CAN THEY DO ON YOUR 401 K. IS YOUR 401 K WORKING FOR YOU OR DO YOU EVEN KNOW WHERE IT IS?

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