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    Okay, you've gotten pink-slipped by your employer...don't add insult-to-injury by making a bad (or poor) choice as you exit your former employer. Before you read my advice (below) let me invite you to seek the best possible advice on HOW TO HANDLE YOUR 401K (or any other type of investment portfolio for that matter." E-mailme if you'd like my referral to sound financial advice and some solid assistance in moving that 401K, IRA or SEP".

    How To Shift Your Retirement Accounts Tax-Free;

    Job-Changers Face Choice On 401K Funds

    Folks that switch employers often have another big decision to make after they change jobs: what to do with the money that has accumulated in their 401K retirement plan. The decision will determine whether they pay tax and possible penalties on that money now, or continue to defer any taxes until retirement.

    If you have a 401K and you don't want to leave the money in the plan of your old employer, you have three choices: you can take the money now, roll it into a new plan, or a combination of the two.

    Take The Money Now

    This can be tempting if you need the cash for current expenses. However, this decision carries a cost: you'll usually have to pay income taxes on your distribution. With some exceptions, you'll also have to pay an additional 10 percent early withdrawal penalty if you're younger than age 59 1/2.

    On a $20,000 distribution for someone in the 28 percent marginal tax bracket, this can mean being left with just $12,200, and even less if you're also subject to state income tax on the money.

    Roll It Over To A New Plan

    Alternatively, you can role the money over into another retirement plan. This can be either an employer-sponsored plan (if your new employer offers an eligible retirement plan and accepts rollovers) or an Individual Retirement Account (IRA.). Do this correctly, and you'll avoid having to pay any current taxes on the money, as well as any penalties.

    Take Some, Roll Some

    If you need a portion of the 401K money, you can take that out and still roll over the rest. You'll have to pay possible taxes and penalties only on the portion you take now.

    Rolling Without Withholding

    If your old employer issues a check to you for the 401K funds, 20 percent will automatically be withheld for taxes. Even if you deposit the check in a new plan, you'll still have to also replace that 20 percent out of your other savings to avoid any taxes and penalties. You'll get credit for the 20 percent withheld only when you file your income tax returns.

    The better way to do a rollover to either another employer-sponsored retirement account or to an IRA is to have money directly- transferred directly from the old account to the new one. Your old company's benefits or personnel office should have distribution forms for rolling your 401K money into a new plan.

    If the funds cannot be transferred directly to the new plan, make sure that any check issued to you by your old employer is payable to your new plan custodian or company plan, not to you personally.

    Remember, there's no better advice that I can give you than directing you to the best advisors available to you, no matter where in the country you may live! Let me knowif you're about to face the reality of employee free agency (i.e., about to be unemployed and need some direction on where to roll your 401K, IRA or SEP dough!) and I'll direct you to my best choice for advice!
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