We know it’s important, just a bit tougher to do these days. Regular contributions to a retirement savings account, such as an employee 401(k), can be difficult when the bigger priority is stretching your dollar.
Retirement savings advantages of rolling over your 401(k)
We know it’s important, just a bit tougher to do these days. Regular contributions to a retirement savings account, such as an employee 401(k), can be difficult when the bigger priority is stretching your dollar. Taking advantage of employer 401(k) matching funds and contributing to your retirement nest egg in a tax-deferred plan are big incentives for plan participation. If you change jobs though, rolling your retirement fund over to your new employer plan instead of cashing it out can preserve your peace of mind as you get closer to your retirement finish line. According to the Employee Benefit Research Institute (EBRI), at least 48.5 million Americans took advantage of 401(k) plans as of year-end 2007, totaling $3.0 trillion or about 17 percent of all retirement assets. When workers change jobs they may leave their money in their old account, roll it over into a new tax-qualified savings plan or just cash it out. A 2006 EBRI study shows that although more job changers rolled all their retirement savings into another tax-qualified retirement plan than in years past, about 60 percent who took a lump-sum payout from their previous employer’s plan did not roll all of it into a new 401(k) or similar tax-qualified plan. Plus, if your 401(k) distribution is paid to you directly and you’re under age 59, you could be subject to a 20 percent withholding tax and a 10 percent penalty on the amount withdrawn in most cases. The Internal Revenue Service (IRS) allows a time window of only 60 days after your distribution is received to decide how you can best invest your hard-earned retirement funds and avoid certain taxes. “It’s very tempting to take money you’ve diligently saved for retirement and use it for more immediate needs,” says James Kontopoulos, Allstate Regional Financial Sales Leader. “When you consider a well-diversified retirement fund can grow with compounded interest and without being taxed as long as it’s in a qualifying account, keeping your 401(k) all together and making regular contributions can help pay yourself much more in the long run compared to a short term benefit. Every little bit you put in or hold onto can really make a difference.” Navigating the waters of retirement savings can make many feel like a ship lost at sea. But help from a Personal Financial Representative can be a solid first step towards building a retirement that works for you. About the Allstate Corporation The Allstate Corporation (NYSE: ALL) is the nation’s largest publicly held personal lines insurer. Widely known through the “You’re In Good Hands With Allstate” slogan, Allstate helps individuals in approximately 17 million households protect what they have today and better prepare for tomorrow through approximately 14,900 exclusive agencies and Personal Financial Representatives in the U.S. and Canada. Customers can access Allstate products and services such as auto insurance and homeowners insurance through Allstate agencies or in select states at allstate.com and 1-800 Allstate. Encompass and Deerbrook Insurance brand property and casualty products are sold exclusively through independent agents. The Allstate Financial Group provides life insurance, supplemental accident and health insurance, annuity, banking and retirement products designed for individual, institutional and worksite customers that are distributed through Allstate agencies, independent agencies, financial institutions and broker-dealers. Securities offered through Allstate Financial Services, LLC (LSA Securities in LA and PA). Registered Broker-Dealer. Member FINRA, SIPC. Main Office: 2920 South 84th Street, Lincoln, NE 68506. (877) 525-5727.
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