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  • If you:

    Have changed jobs

    Are about to change jobs

    Are retiring

    Making a decision regarding the assets in an employer-sponsored retirement plan can have a significant impact on your long-term goals. As you assess your options, consider the following pros and cons.

    Options Advantages Considerations
    Roll over assets into an IRA Maintains the tax-advantaged status of your investments Does not offer loan provisions
    Enables consolidation of retirement plan assets Certain investments may not be available
    Usually offers access to a wider range of investment options (vs. keeping the assets in an employer-sponsored plan), making it easier to create an appropriate investment portfolio
    Gives the option of taking penalty-free withdrawals under certain circumstances
    Allows investors to make withdrawals at any time
    Roll over assets into your new employer's plan Maintains the tax-advantaged status of your investments Limits investment options to those in the new plan
    May permit loans* Limits your access to withdrawals*
    Generally allows for penalty-free withdrawals if you seperate from service in the year you turn age 55 or older (although your distribution is still subject to income taxes) May involve a waiting period prior to moving assets from a former employer's plan*
    Access to certain investments that may not be available outside your plan
    Leave the assets in your former employer's plan Offers familiar investment options May have a minimum balance requirements of $5,000 to remain in plan*
    Maintains the tax-deferred status of your investments Continues plan withdrawal provisions
    Generally allows for penalty-free withdrawals if you seperate from service in the year you turn age 55 or older (although your distribution is still subject to income taxes)
    Cash out your 401(k) account Provides immediate access to your retirement plan assets Removes the potential for continued tax-deferred or tax-free growth of your assets
    Mandatory 20% withholding on the distribution. You may be liable for more when you file your taxes, if your income tax rate is higher than 20%
    May be subject to 10% early withdrawal penalty if you are under age 59 1/2 (some serious exceptions apply)
    *Depends on employer plan provisions
    Copyright 2014, T. Rowe Price Investment Services, Inc., Distributor. All rights reserved.