Where will your retirement money come from? If you’re like most people, qualified-retirement plans, social security, personal savings and investments are expected to play a role.

Once you have estimated the amount of money you may need for retirement, a sound approach involves taking a close look at your potential retirement-income sources.

There are typically four options available for an old 401(K), leave it with your old employer, rollover to an IRA, rollover to a new employer, or cash out of the plan.

Direct Rollover to an IRA - Recommended Best Choice
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For many people, rolling their 401(k) account balance over into an IRA is the best choice. By rolling your 401(k) money into an IRA, you'll avoid immediate taxes and your retirement savings will continue to grow tax-deferred.

A Rollover IRA allows you to move eligible money from your former employer plan directly to an IRA.

This option allows your money to continue to grow tax-deferred, and you typically have more investment choices available than in a former employer’s plan. Be sure to consider the fees and expenses associated with an IRA, as they can vary widely.

Leave the money in your former employer’s plan
This option is typically available if the plan allows it and your vested account balance is greater than $5,000. You may choose to take your funds later or keep the funds in the plan until retirement age.

There are a few points to consider with this choice, including the amount of investment options available in the plan, access to money, fees and charges.

Direct Rollover to a new employer’s plan
If your new employer offers a retirement plan and accepts rollovers, you may have the option of a rollover to your new employer’s plan. Consider the investment options, fees and access to funds in the new employer plan, as these can vary from plan to plan.

Take a Cash Distribution
This option should generally be avoided unless there is an immediate need for the funds. If you decide to take the cash as a lump sum, depending on your age and tax situation, you may be subject to income tax and possibly a 10% early withdrawal penalty. Your distribution will be subject to:

• 20% tax withholding: 20% of your distribution is required to be withheld by the IRS for prepayment of federal income taxes
• Federal income tax: In addition to the 20% withholding, you may owe additional federal income tax, depending on your tax bracket
• Early withdrawal penalty: You may owe an additional 10% of your distribution if you’re under the age of 59 ½ or have separated from service prior to the age of 55.
• State and local income taxes: You may also owe state and local income taxes.

As you can see from the taxes and possible penalties involved, a cash distribution should be a last resort.

Fortress Financial can provide assistance in the following areas ON LONG ISLAND:

Retirement Investments

• Bonds
• Common Stock
• Educational IRA
• Traditional IRA
• Roth IRA
• SEP IRA
• Simple IRA
• Brokerage Accounts
• Treasury Bills
• Government Securities
• Treasury Notes
• Variable Annuity

Financial Planning

• Retirement Plans
• Tax Plans
• 401(k) Planning
• 403(b) Planning
• College Plans
• Estate Plans
• Money Purchasing Plans
• Profit Sharing Plans

Insurance

• Disability Income Insurance
• Life Insurance
• Long-Term-Care Insurance

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