In our last blog, we talked about taking your 401k to a new job. Another choice is to liquidate your old plan and receive the money directly. While it can be tempting to see your savings as a quick source of cash, cashing out may result in penalties and taxes.
Your 401(k) plan administrator will withhold 20 percent of your current account balance to prepay the tax you’ll owe. Remember, your 401(k) was funded with pre-tax dollars. Your account will pay federal, state, and local taxes.
Also, the IRS will consider your payout an early distribution and may assess a 10 percent early withdrawal penalty.
Why Work with a Financial Professional?
One of the benefits of working with a firm like ours is the comfort of knowing that you have a team of professionals continually monitoring your investments and keeping you on track.
Investments are just one piece of your overall financial picture. As professionals, we take every aspect of your financial life into consideration when building customized strategies for your retirement.
What Should You do Next?
Whether you’re leaving your job to pursue other opportunities or are on the wrong side of the economic downturn, the transition can be a stressful experience. Discussing your situation with a financial professional can help you relax and explore all your choices.
In our 30-minute complimentary session, we’ll take a look at your current financial situation and present you with strategies that make the most sense for you and your financial future.
WE’LL SHOW YOU: • How to negotiate a settlement or compensation package • What to consider if you own company stock • The dangers of holding too much company stock • How to prevent job losses or money emergencies from derailing your financial future.
We developed this session format after helping hundreds of clients manage their finances during critical life transitions.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2023 FMG Suite.