Keep or spend the distribution from your qualified employer plan
Workers are also, in alarmingly high rates, spending down or cashing out their retirement plans. Why?
• To fill a gap between the last check from previous employer and first check from new employer.
• To fund time off between jobs.
• Because that big chunk of money is irresistible.
• Because it may seem like a hassle to make arrangements to reinvest or move money.
While the rationale to spend your retirement savings may make sense at the time, the reality is that doing so can leave you with 20-25% less money at retirement. What’s more, distributions will be subject to a federal withholding tax of 20% and, if you withdraw the funds before age 55, you’ll also pay a 10% early distribution penalty*
It's easy to think short term. Contact me and I can help determine the potential long-term effects of keeping and/or spending your distribution.
*Exemptions may apply.