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Rollover Options

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You have been saving for retirement in your employer’s retirement plan. Now that you are leaving your job, you must decide what to do with your retirement plan savings. Union Bank & Trust Company can help you decide the option that is right for you.

Roll Retirement Savings to an IRA
You can roll over your retirement savings to a Traditional IRA. The benefits of a Rollover IRA include the following:

  • Continued Tax-Free Growth. A Rollover IRA will allow your retirement savings to grow on a tax-deferred basis without incurring any immediate taxation or penalties.
  • Consolidation of Retirement Savings Accounts. You may have retirement accounts held by one or more of your former employers. Consolidating multiple employer-sponsored retirement accounts into a Rollover IRA makes it easier for you to manage your retirement assets.
  • Choice of Investment Options. A Rollover IRA may provide you with investment options that may not be available in your former employer’s retirement plan.
  • Greater Control over Retirement Savings. Your former employer’s retirement plan may have rules restricting when you can change investments and make withdrawals. In a Rollover IRA, you retain control and flexibility over how your retirement assets are invested and when you can receive withdrawals.
  • Potentially Lower Fees. A Rollover IRA may have lower fees compared to your former employer’s retirement plan (or your new employer’s plan, if applicable).

If your retirement account consists of pre-tax contributions, you can roll your retirement account to a Roth IRA instead of a Traditional IRA. The tax consequences, however, are different depending on whether you roll over your account to a Traditional IRA or a Roth IRA. If your retirement account includes a Roth Account, you can roll your Roth Account only to a Roth IRA.

Transfer Retirement Savings to New Employer’s Retirement Plan
If your new employer has a retirement plan, you may be able to transfer your retirement savings to your new employer’s plan. You should check with your new employer to determine whether this option is available to you.

Transferring your retirement savings to your new employer’s plan will allow your retirement savings to grow on a tax-deferred basis, and allow you to consolidate your retirement accounts. Depending on the terms of your new employer’s plan, however, your investment choices may be limited. In addition, you may be limited as to when you can make investment election changes and when you can begin receiving withdrawals.

Keep Retirement Savings in Former Employer’s Plan
You may be able to keep your retirement savings in your former employer’s retirement plan. However, if you have a small retirement account balance, your former employer may require you to withdraw your retirement savings, meaning this option may not be available to you. The advantages and disadvantages of this option are similar to transferring your retirement savings to your new employer’s plan.

Receive a Cash Withdrawal
You can receive a cash withdrawal of your retirement savings account. This is generally the least preferable option because you will pay federal and state income taxes, and may have to pay a 10% penalty if you have not attained age 59 ½. In addition, receiving a cash withdrawal will reduce your retirement savings.

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*Investment products: Not FDIC Insured - No Bank Guarantee - May Lose Value.