The Tribune Democrat, Johnstown, PA


January 26, 2013

SAM CARPENTER | When leaving your job, what to do with 401(k)

JOHNSTOWN — In previous decades, employees worked for one company until their retirement and received payouts from the company pension plan. However, imagine if when you retire, you had to piece together up to nine separate 401(k) plans from your various employers.

Tracking all of the companies and taking distributions could be difficult and costly tax-wise.

If you leave your job, what will you do with your 401(k)?

Some companies may allow you to remain in the 401(k) even if you are no longer an employee. You could roll that money into your next company’s 401(k).

For many American workers, a rollover to an Individual Retirement Account (IRA) is a vehicle for retirement savings when you change jobs.

When you decide to request a rollover, contact your company’s benefits department about rollover procedures.

Typically, you have a few options when handling this transfer. One of the options may be to receive a payout from the company directly or roll the funds into an IRA. If you receive the funds directly, the distribution will be subject to a mandatory 20 percent withholding even if you intend to roll the funds to an IRA within 60 days. And if you have company stock inside your 401(k), you may want to take advantage of the long-term capital gains rate on your earnings instead of rolling the stock to an IRA.

For information, contact a financial adviser.

Sam Carpenter is a certified financial planner and partner with Carpenter Financial Services, 237 Johns St., Johns­town.

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What is the biggest key to reducing gun violence in Johnstown?

Tackling the area's drug problem.
Controlling folks moving into city housing.
Monitoring folks in treatment centers and halfway houses.
Tougher sentencing by the court system.
More police on the streets.

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