If you’re leaving your employer, you'll need to decide what to do with your workplace retirement plan account.
While you may have a number of options, be aware that each choice has pros and cons. What you decide could have a substantial impact on both your current financial situation and your retirement income. That's why it's so important to take the time to carefully consider your options.1
You may also want to consult a financial professional before you make your decision.
Leave it where it is
|
Roll it over into an IRA
|
Move it to another employer's retirement plan
|
Withdraw it
|
THINGS TO CONSIDER BEFORE MAKING YOUR DECISION:
- Are there any tax implications?
- Will you pay more in fees and charges if you move your account?
- Are your current investment selections helping you meet your goals?
- Are you satisfied with the customer service of your current plan?
- Does your current financial situation make a cash withdrawal necessary?
Investors should also consider the possible loss of vested benefits in the previous plan and costs that may be imposed by the existing provider (i.e. surrender charges). In addition, they should consider any new surrender period charges that may be imposed by the new plan.
A CASH WITHDRAWAL CAN REALLY COST YOU NOW — WITH TAXES.
Let's say you have an account balance of $100,000 and decide to take a $50,000 withdrawal. After taxes you could end up with only $30,000.2
IT COULD ALSO COST YOU LATER — WITH YOUR SAVINGS.
If you had kept the money in your tax-deferred retirement account, any earnings may have accumulated faster. In this hypothetical example, your account balance of $100,000 would grow to about $330,000 over 20 years.3
Take a look at what your account balance would be if you took a $50,000 withdrawal compared to if you left the money in your account!
YOU'VE WORKED HARD TO BUILD UP YOUR WORKPLACE RETIREMENT PLAN BALANCE.
THINK CAREFULLY BEFORE YOU DECIDE WHAT TO DO WITH YOUR ACCOUNT.
1 Not all options are available for all participants
2 This example assumes the participant is less than 591 ⁄2 and is subject to a 25% federal tax rate, a 5% state tax rate and a 10% federal penalty tax. Your tax rates may be higher or lower. Other charges may apply.
3 This illustration is hypothetical, and does not represent the performance of any investment option available in your retirement program. It assumes a hypothetical 6% annual effective rate, a 25% federal income tax bracket and lump-sum withdrawals. Withdrawals of tax-deferred accumulation are subject to ordinary income tax. Tax deferral is a feature of your employer’s plan, not The Hartford’s retirement services.
Many tax planning strategies emphasize the deferral of current income taxes, on the basis that your federal income tax rate may be lower at retirement. Please keep in mind that federal income tax rates are unpredictable and may be higher when you take a distribution than at the time of deferral. Other factors, including state tax rates and your income, may also affect your overall tax rate upon distribution. Please consult with your tax advisor for individual tax planning strategy and advice. The Hartford does not predict or in any way guarantee favorable tax results.
This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. This information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
Before investing, you should carefully consider the investment objectives, risks, charges and expenses of the mutual funds or The Hartford's group variable annuity products and funding agreements, and their underlying funds. For fund and product prospectuses and/or a disclosure document containing this and other information, contact your financial professional or visit our website. Read them carefully.
"The Hartford" is The Hartford Financial Services Group, Inc. and its subsidiaries, including Hartford Life Insurance Company, Hartford Retirement Services, LLC ("HRS"), and Hartford Securities Distribution Company, Inc. ("HSD"). HSD (member FINRA and SIPC) is a registered broker/dealer affiliate of The Hartford.
Retirement programs can be funded by group fixed or variable annuity products and funding agreements issued by Hartford Life Insurance Company (Simsbury, CT). Group variable contracts are underwritten and distributed by HSD, where applicable. HRS and HSD offer certain service programs for retirement plans through which a sponsor or administrator of a plan may also invest in mutual funds on behalf of plan participants.
RPS 109207 3/12
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