Options for your retirement assets after a job change


A well-dressed man smiles while on a phone call in the backseat of a car

 

Key Points

  • When you move to a new employer, you have options for retirement assets from the former job.
  • Three primary approaches have unique pros and cons.
  • As you continue to save, it is important to regularly revisit the asset mix across your accounts.

When changing jobs, you have new options for your employer-sponsored retirement savings. Like other life changes, your advisor can help you assess your options in the context of all your financial goals.

 

Keep savings with your former employer’s plan

This is a convenient choice if you are happy with the investment options and your former employer allows you to maintain the account. They may require a minimum balance or limit how long you can keep your account in the qualified plan.

As with all financial accounts:

  • Track them regularly.
  • Review your investments as part of your overall portfolio.
  • Keep the beneficiary designations current.

 

Transfer the savings to your new employer’s qualified plan

If your new employer accepts rollovers, you may find it easier to track your investment performance in one account versus several with former employers.

Their qualified retirement plan might offer investment options that better support your financial goals. Your Ameriprise financial advisor will compare the investments, features and costs to inform your decision.

With a direct rollover, you can transfer your entire account balance without taxes or penalties. Work with your new employer’s 401(k) plan administrator to select how to allocate your savings into the new investment options.

If you plan to retire early, there is a benefit of a 401(k) account compared to an individual retirement account (IRA). Most employer-sponsored qualified retirement plans allow participants age 55 or older to take distributions without incurring the 10% IRS premature distribution penalty. Traditional IRAs generally don’t allow penalty-free distributions until age 59 1/2.

 

Roll your funds into an IRA

With an IRA, you are the owner of your retirement savings rather than a participant in an employer’s qualified plan. An IRA offers:

  • More investment options and flexibility than an employer plan
  • Broader advice services from your advisor
  • Integration with your financial plan
  • Guaranteed retirement income options
  • More flexibility with the timing of withdrawals, which can help reduce your tax burden in retirement.

Depending on your situation, there may be benefits to leaving assets in an employer plan as well. Many large plans have access to low-cost investments, so it’s important to determine whether the benefits of an IRA outweigh any additional cost. Your advisor will help with a full review of your situation.

 

Get your advisor’s insight

At any time, you can add your retirement accounts to Total View in the secure site on ameriprise.com. This gives you and your advisor a more complete view of your investments — including those from other financial institutions — in one secure place.

Whether you’re joining a new employer or revisiting your current asset allocations in an existing qualified retirement account, your advisor will provide personalized advice to help you decide with your long-term goals in mind.