Option 1:  Leave your money in your former employer’s plan
Potential benefits

• No immediate action is necessary
• Earnings remain tax-deferred until withdrawal
• Keep money in plan-specific investment options
• Investment alternatives may include lower-cost, institutional-class products
• Loans and hardship withdrawals may be permitted
• Penalty-free withdrawals permitted if separated from service after age 55
• Potential increased protection from creditors under federal law
• Plan may have lower administrative fees than other options

Issues to Consider

• May have a limited number of investment options
• Withdrawal options may be restricted
• Cannot make additional contributions
• Some plans may not provide access to plan-specific advice
• Plans may have administrative fees (e.g., recordkeeping, compliance or trustee fees)
• Plan may impose limitations (e.g., income distribution or spousal waivers) or plan may be changed by employer (e.g., available investments, fees, services, providers, termination provisions)
• Managing assets across multiple plans or accounts may be difficult

Option 2:  Roll assets into a new employer’s 401(k) plan
Potential benefits

• Earnings accrue tax-deferred
• Plan may allow for a loan or hardship withdrawal
• No income tax or penalties with a direct rollover
• Penalty-free withdrawals permitted if separated from service after age 55
• Potential increased protection from creditors and legal judgments
• Plan may have lower administrative fees than other options
• Investment alternatives may include lower-cost, institutional class products
• Access to plan-specific advice

Issues to Consider

• New employer’s plan may not accept rollovers
• Withdrawal options may be restricted
• Typically limited investment choices
• May need to liquidate investments
• Plans may have administrative fees (e.g., recordkeeping, compliance or trustee fees)
• Plan may offer more expensive investment options, including commissions, than your former employer’s retirement plan
• Plan may impose limitations (e.g., income distribution) or plan may be changed by employer (e.g., available investments, fees, services, providers, termination provisions)

Option 3:  Roll your assets into either a Traditional or Roth IRA
Potential benefits

• Depending on the type of rollover, there may be no income tax or penalties
• You can consolidate multiple accounts into one, providing a clearer picture of your retirement assets
• Typically a broader range of investment options
• Continued opportunity for tax-deferred or tax-free growth, depending on the type of IRA.
• Continue to make contributions subject to IRS limits
• Many IRA providers offer managed accounts, which can provide professional management tailored to your investment preferences
• Ability to convert to a Roth IRA

Issues to Consider

• Access to plan-specific investments may not be available
• Cannot take a loan from an IRA
• Some IRA investments may include trading-related expenses, including commissions and fees
• May need to liquidate investments before rolling over to an IRA
• No penalty-free withdrawals prior to age 59½ (exceptions are available)
• Some investment expenses and account fees may be higher
• IRA assets generally protected by bankruptcy (state laws vary)

Option 4:  Withdraw your money for a cash distribution
Potential benefits

• Immediate access to your cash

Issues to Consider

• Taxes and penalties for cash distributions can be hefty, and your savings will no longer grow tax-deferred, thus impacting whether you have enough money when you retire
• Potential 10% early withdrawal penalty may apply if you are under age 59½
• 60-day window to roll over before funds are taxed as ordinary income and could incur potential penalties