There is a lot of talk about Great Resignation – the phenomenon of many employees leaving their job as the pandemic lock downs ease. A large disruption often leads people to rethink their lives and many economists believe this trend will continue as employees seek better terms, more money and flexibility. If this describes you, great – a change for the better is positive.
With all the excitement about new opportunities, it is easy to forget some fundamentals of our safety net. Benefits package that comes with the new job should be a factor in the decision – you need to make sure that you have adequate life and disability coverage, health insurance and a retirement plan.
Once you leave your old job, what do you do with your old 401k? If you have more than $5000 saved, the employer has to let you stay in the plan. Sounds good? Except that you will now have to pay costs that your former employer paid while you worked for them and that you will still have limited choices that are often part of the work retirement plans. Plus there is a tendency to forget the savings and move on.
The second option is to roll it over into the new employers plan. That is a decent option if the new plan is good.
The most flexibility is when you roll the old 401k into an IRA. Whether you are DIY investor or work with a financial advisor, this option offers the most flexibility as many custodial platforms offer a much wider variety of potential investments – which allows you to achieve better diversification and risk management.
There is of course an option to cash out, which unless you are older than 59 1/2, carries a 10% penalty – thus should only be considered as a last resort.
Once the decision is made it is essential to request a direct rollover – which moves money from old 401k custodian to the new custodian directly – avoiding any potential issues with the IRS.
If you are in this situation and unsure what to do, contact Honey Badger Advisors for help.
Now it’s no longer “Transitory”
So the Fed finally acknowledged that the inflation is higher and more persistent than what they were trying to convince us all this time. Perhaps