At the present time it appears as though economic indicators are looking up, but it is no secret that unemployment has been high over the last several years. If you were to lose your job after contributing into a 401(k) while you are employed you may be wondering what becomes of your account, and we would like to take a brief look at this type of scenario here.
One course of action that you could take would be to do a direct rollover into an individual retirement account. Or, if you found employment quickly and your new employer offered a 401(k) program you could do a direct rollover into this plan. With a direct rollover you are not penalized in any way.
It could also be possible for you to simply leave your money in the same 401(k). There are some disadvantages to this however because costs that were previously picked up by your employer could be shifted to you, and it can sometimes be difficult to get help with your account once you’re no longer employed by the company offering the plan.
Another possibility would be to cash out the account. The problem with doing this is that you must pay a 10% penalty in addition to the 20% tax that will be levied.
If you were to become separated from your job you must act wisely to keep your retirement plans on track. Should you find yourself in this situation the wise course of action would be to seek advice from a licensed, savvy Indianapolis financial planning lawyer.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
Latest posts by Paul A. Kraft, Estate Planning Attorney (see all)
- Is Your Power of Attorney Powerless? What to Do When a Third Party Won’t Honor an Agent’s Authority - September 11, 2019
- Are There Different Types of Special Needs Trusts? - September 4, 2019
- How Much Might I Receive in Veterans Aid & Attendance Benefits? - August 29, 2019