For Mark Roberts’ Use: With the New Year often come new career goals. You might be feeling tired of your current job path, annoyed by a commute, ready to increase your income, or eager to find more fulfilling work. Whatever the reason, you might have decided to begin looking for a new job in 2016.

We hope you reach your goals, but take a moment to consider all possible ramifications of changing employers. One of the most important things to remember is that you will face a decision about what to do with the funds that have accumulated in your employer-sponsored retirement plan. In most cases, you will have four options:

  • Leave the funds in your former employer’s plan (if allowed)
  • Roll the funds over to a new   employer’s plan, if your new employer has a retirement plan and allows a rollover
  • Roll the funds over to an IRA
  • Take all or part of the funds as a cash distribution

Each option carries its own advantages and disadvantages. In most cases, the last option is not a good idea. You might feel tempted to take a cash distribution to pay off debts or accomplish some other financial goal, but doing so will usually trigger a 10 percent tax penalty. The extra income might also push you into a higher tax bracket for 2016, triggering additional taxes next spring. And of course, you will give up years of interest that would have accumulated in coming years, making retirement more difficult one day.

Given those facts, you should probably choose from the first three options which will help you preserve the tax-advantaged status of your investments.

If you choose to operate a rollover, do so under the guidance of a financial planner who can help you navigate all of the possible consequences. If you take the distribution direction, you could be subject to a huge income tax penalty. You will have only 60 days to put the money in a new IRA or employer-sponsored plan. If, for any reason you fail to complete your rollover, you will lose a significant portion of your money to the IRS.

Deciding what to do with the funds in your old employer-sponsored plan can be a difficult decision. Since your choice will impact you once you retire, take the time to receive counsel and make a sound decision now. Call our office to schedule an appointment, and we will help you wade through your options.