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This article brought to you courtesy of Matt Stutes, CFP, of Cornerstone Wealth Management, Canby Herald Financial Planning Expert.

Matt Stutes, CFP

Changing jobs introduces a new dilemma for people: what to do with the 401(k) account they had with their former employer. Should they consider taking the cash distribution, or could there be a better choice?

Here are some options to consider:

1) Take the Cash:

People may choose to liquidate based on interest rates and cash in hand, but it is important to consider taxes. When you take cash distributions from your 401(k) account, you may have to pay taxes and fees. This includes a 20% federal withholding tax and then another 10% penalty for people who are under the age of 59.5.

2) Directly Roll the Money Into An IRA:

An individual retirement account is much like a 401(k), but it can remain independent of any employer. You may want to consider this option if you change jobs often or if a new employer does not offer retirement plans.

3) Use the New Employer's Plan:

Some professionals prefer to keep rolling their 401(k) savings forward. You may want to consider this option if you mostly work corporate jobs with good 401(k) plans.

Rolling the money over directly from one employer to the next may also help to eliminate any fees from the IRS.

4) Keep the Old Plan:

If you have at least $5,000 in your old retirement account, your employer must allow you to retain your 401(k) account if you want to. You can no longer make contributions

but you can make decisions regarding the investment of your assets.

The right approach depends on a number of factors. If you're in a position where you need to make a decision like this, reach out to our office today.

Cornerstone Wealth Management

486 N.W. 2nd Avenue

Canby, OR 97013


Securities and advisory services offered through LPL

Financial, a registered investment advisor. Member


The opinions voiced in this material are for general

information only and are not intended to provide

specific advice or recommendations for any individual.

Rebalancing a portfolio may cause investors to incur

tax liabilities and/or transaction costs and does not

assure a profit or protect against a loss.

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