Megan and Courtney, On In Service Distributions

By: From 13 News, Posted by Ralph Hipp
By: From 13 News, Posted by Ralph Hipp

Welcome to Money Matters. Did you know that you might have other investment options for your life savings that what is available in your 401k? Most people think they can’t touch those assets, until they have officially retired. Courtney Cook and I want to look at three popular beliefs concerning employer-sponsored retirement plans, such as 401K’s.
The first belief is that there are limited options for your retirement plan money until you change jobs or retire. This is not necessarily true. Some employer-sponsored retirement plans permit you to roll over the employer contributed portion of your retirement account into an IRA while you’re still working for that employer. The employee portion of the retirement plan will remain with the employer until you separate from service. This type of rollover is known as an, in-service distribution.
The second belief is, if you withdraw money before age 59 ½ to allocate elsewhere, you’ll pay enormous tax penalties. Not always. If your retirement plan allows for in-service distributions and the funds are rolled over to an IRA, there will not be a 10% IRS penalty for early withdrawal – even if you are under age 59 ½.
The third belief is, if you withdraw money to allocate elsewhere, the tax-withholding requirements will leave you with a substantially reduced amount. Again, not always the case. If you use a “direct rollover” to move the distribution to your IRA, there will be no income taxes withheld. If you feel your workplace plan limits your allocation choices, a personal traditional IRA may give you different options to consider. An IRA can incorporate features that may not be available in your employer-sponsored retirement plan.
With more freedom and options, comes a greatly increased sense of control. You will have control over what you do to realize your retirement goals. In addition, if you don’t need this portion of your retirement assets, the control you now have will allow you to pass this money on to future generations.
Contact our office today at 877-374-4524 and learn if an in-service distribution may be a suitable way of offering you the increased freedom and control you’re looking for in a retirement strategy. There may be an alternative to just accepting your employer-sponsored retirement plan. An in-service distribution can change the nature and character of your retirement possibilities, and offer you increased input over your financial future.
Thank you for joining us today. Please join on the radio this Sunday on WIBW AM 580 at 11:00 where we will talk more about in-service distributions.

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