Preserving Retirement Funds

Many retirement plans allow you to take vested benefits with you if you change jobs before retiring. However, unless your retirement benefit from your former employer is paid directly to your IRA or to your new employer’s plan, 20% of your funds must be withheld for Federal taxes. These funds will be refunded when you file your tax return. Without a direct rollover, funds may be needed to pay taxes and penalties for early distribution.

Be sure that your retirement benefits are properly transferred, and consider all of your options when you change jobs.