You got laid off, now what do you do with your 401k?

January 28, 10:26 AMNews You Can Use ExaminerMary Schwager

Previous Next

Comment Print Email RSS Subscribe

Subscribe

Get alerts when there is a new article from the News You Can Use Examiner. Read Examiner.com's terms of use.

Email Address   Include other special offers from Examiner.com Terms of Use

Each day lately the same terrible headlines monopolize the news: layoffs.  Tens of thousands of recently unemployed workers in the US are now facing tough decisions--one of them is what to do with your 401(k) or employer sponsored retirement account. Financial advisor Greg Menges, owner of Boston Independent Advisors joins us today as a guest columnist to answer common questions he's fielded from people facing this dilemma.

Q:   I just got laid off, what do I do with my retirement plan?

Greg Menges: The first thing to do is contact your plan administrator and find out what the rules are.  A company must have an exit plan for anyone with a 401(k) who gets laid off.  All retirement plans are highly regulated to protect you, but some practical things to consider:

• Ask how long can you keep your 401(k) in your company's plan after you leave.
• If your company matches your contributions, ask how much of your money is vested.
• If you aren't fully vested some of the balance may stay with the company.
• Federal law says if you have less than $5,000 in your account the company must cut you a check. If you don't want to face huge tax consequences, you have 60 days to get your money into an Individual Retirement Plan (IRA) or, if you get a new job, you may be able to roll the money into your new company's 401(k) program.
• Instead of cashing out and taking a taxing check, you can also ask your plan administrator to roll your money over into an IRA of your choice.

Q:  What is a rollover?

Greg Menges: A rollover is when an employer-sponsored account is transferred into another retirement plan without any tax consequences or penalties.

Q: What if I have more than one retirement account, from more that one company?

Greg Menges: You can roll over all the 401(k)'s you have into one IRA.

Click here for a continuation of this discussion, including: the differences between a 401(k) and an IRA---and is it better to take your pink slip, cash out of your plan, take the money and run?

Do you have more questions? Email them in. They will either be answered directly or included in another article.

Gregory Menges is a founder of Boston Independent Advisors. Greg is a seasoned financial advisor with more than 15 years experience serving individuals, families, business owners, and company sponsored retirement plans.  Securities offered through Investors Capital Corp., Member FINRA/SIPC Advisory Services offered through Investors Capital Advisory. 

100 Franklin Street, Suite 604, Boston, MA 02110, (877) 338-1330 x201 

Free, quick ways to check out your financial advisor or broker, it's all public record and it's all online, click here.

TAX TIPS YOU CAN USE:

• Child tax credit, can you claim it? Click here
• IRS deadline for claiming tax refunds, click here
• Tax credits you don't want to miss, click here
• FREE tax help! Click here
• Click here to track or trace your tax refund
• New tax break for first time homebuyers, click here
• Why your paycheck may be larger this Spring! Click here
• Real estate tax deductions, click here

If you like this column, subscribe to it ! News You Can Use -- delivered right to your in box when it's posted. Click on "Subscribe"  above.