Transferring Retirement Savings When You Change Jobs
When a worker changes jobs, he or she often cash their employer retirement plans immediately for a variety of reasons. There may be a lag between the time the worker ends his or her previous job and begins a new job, or that worker may want to take time off between jobs. Because of the gap in receiving payment, individuals tend to use those retirement savings to pay bills or even to make substantial purchases. This decision may seem tempting in the moment, but when employees fail to transfer their retirement savings and assets into a new employer plan or IRA plan, they may be risking their future financial security. In order to possess an adequate amount of money to retire on and live off of, transferring your retirement savings from one job to the next is the safest option.
Benefits of Transferring Your Retirement Savings
Nearly half of U.S. workers that change jobs spend their retirement savings instead of transferring the money. Benefits of letting your retirement savings rollover to your next job include:
- Enjoy tax-deferred earnings on these assets
- Prevent tax-withholding requirements on retirement plan assets that aren’t rolled over to a new retirement plan
Spending retirement funds on anything other than retirement can put your future at great risk. Younger workers may not realize the long-lasting consequences, as they are decades from retiring, but it is important to accumulate funds that will support you when you are no longer able to work.
Contact an Austin Accountant Today
If you are between jobs and are unsure how to handle your retirement savings, we can help you navigate this process and make the best decision for your financial future. Contact an Austin accountant by filling out the form at the top of this page today.