8 Steps to Dealing with Forced Retirement

Building on our last point, it’s an enormous temptation for some people to just cash out of their retirement plan entirely. Again, that would be a tragic mistake in regards to your long-term financial success. Your choices are to rollover your existing 401k assets into a new so-called “rollover” IRA at a financial institution such as your brokerage firm or bank, or deposit the funds into an existing IRA. The first option is generally the better of the two ideas because if your future employer allows you to bring your old assets from your previous company-sponsored retirement plan, you can simply transfer them into your new 401k plan after you’ve been hired. If you mixed assets, however, you’re out of luck.

Also, the best option is to have your employer roll the cash over directly into your new account. Otherwise, you’ll face a mandatory IRS withholding of twenty percent.