Move Your Investments to Your New Employer's Plan

If your new employer offers a qualified retirement plan, you may be able to move your assets into it. This option offers you the benefit of consolidating your retirement assets in one place. To avoid the 20% mandatory tax withholding, have your distribution rolled directly into the new plan. Make sure your new plan will accept the transfer before asking for the distribution from your old plan.

Before you choose this option, it's also a good idea to explore the investment choices and any restrictions under the new plan. You may find that a Rollover IRA provides you with greater flexibility. Keep in mind that if you choose a rollover IRA, you'll still have the option of moving your investments into your new employer's qualified retirement plan at a later date – as long as you keep these assets in a separate account from your other retirement savings.

Advantages of Transferring to Your New Employer's Plan

  • Avoids current income taxes, penalties, and the 20% mandatory withholding.
  • Investments continue to grow tax deferred.
  • Your retirement assets are in one place and are easier to track.
  • If the new plan has a loan feature, you may be able to borrow your assets.

Disadvantages of Transferring to Your New Employer's Plan

  • Investment choices are limited to the plan selections.
  • Plan may limit withdrawals and exchanges between investments.
  • Not FDIC Insured
  • No Bank Guarantee
  • May Lose Value