One of the easiest ways to take charge of your financial planning for retirement is by consolidating all your retirement assets in one place.
Citing data from the Social Security Administration (SSA), a study by the U.S. General Accounting Office noted that 25 million separating participants in all defined contribution plans, including 401(k) plans, as well as in defined benefit plans, left at least one retirement account behind, with millions leaving behind two or more accounts. The study also noted that many people have more than one job and may participate in more than one company-sponsored retirement plan.
If you are among the millions of people who may have assets in a 401(k) or 403(b) plan with a former employer, or an Individual Retirement Account (IRA), moving those funds into one retirement account may provide you with several tangible advantages over having your retirement assets held in multiple accounts.
Simplicity, Convenience, Access
For example, all your retirement savings may be viewable on a single website. That can make it much easier and more convenient to manage your retirement assets, monitor their performance, maintain your asset allocation preferences or change them if necessary. Having all your assets in one retirement account as opposed to many different accounts may also save you money on account management and maintenance fees.
Earlier access to your money is another potential advantage of consolidating your assets into an employer sponsored retirement plan such as a 401(k) or 403(b). For example, unlike an IRA, you may be able to start withdrawing funds as early as age 55 without being impacted by the 10% federal early withdrawal penalty if you are between the ages of 55 and 59½ and you terminate your employment with the sponsor of your plan.
On the flip side of the coin, participants who choose to work beyond retirement age also may benefit by delaying required withdrawals from their retirement account. In general, individuals must begin taking required minimum distributions (RMDs) from IRAs and defined contribution plans at age 72. However, if you are a participant in an employer-sponsored retirement plan, you may be able to delay taking RMDs past age 72 if you continue working for the employer sponsoring the plan. That allows your savings more time to grow and compound on a tax-deferred basis until you decide to finally stop working.*
Consolidating your assets into one retirement plan could be easy and painless. Rollovers are tax-free and offer the capability to streamline your recordkeeping and reduce the clutter of paper files.
To learn more about preparing for a financially secure retirement, visit our What's New Articles Archive, where you'll find informative insights on a variety of tools to help you develop your retirement savings game plan.
* Generally, withdrawals are subject to income tax at your ordinary income tax rate at the time of withdrawal, and if made prior to age 59½, a 10% federal tax penalty. Consult your tax adviser regarding your specific situation.
Before making a transfer, you should review the accounts you have with other providers to determine the fees and expenses you currently pay and whether there are any surrender charges that may result and to ensure that it is in your best interest to transfer your other accounts to your current plan.
You should consider the investment objectives, risks, and charges and expenses of the variable annuity contract and the underlying investment funds carefully before investing. This and other information is contained in the contract prospectus or brochure and underlying funds prospectuses and summary prospectuses, which can be obtained by calling 1-866-954-4321 or visiting mutualofamerica.com. Read them carefully before investing.
Mutual of America's group and individual retirement products are variable annuity contracts and are suitable for long-term investing, particularly for retirement savings. The value of a variable annuity contract will fluctuate depending on the performance of the Separate Account investment options you choose. Upon redemption, you could receive more or less than the principal amount invested. A variable annuity contract provides no additional tax-deferred treatment of benefits beyond the treatment provided to any qualified retirement plan or IRA by applicable tax law. You should consider a variable annuity contract's other features before making a decision.