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Thursday, May 30, 2024

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Best Strategies For Managing An Old Retirement Plan

Finances FYI Presented by JPMorgan Chase & Co.

Managing an old retirement plan can be intimidating and confusing. Most people simply close old accounts, not understanding there may be better options available to them. Every person’s situation is different, and it’s essential to consider your specific financial goals when deciding what to do with your assets. Making the wrong decision could cost you money in the short term and have more significant ramifications around tax time. Instead of closing your old account and moving on, read on for our guide to managing an old retirement plan. You might be surprised at some of the options you have, and they could end up saving you big.

Leave It

One option few people consider is leaving their plan with their old employer. Most companies allow former employees to keep retirement accounts with them. This may be the most straightforward option, as managing multiple plans can become overwhelming. Doing this will retain a tax advantage for your money, and if you’re happy with the portfolio, there may be no reason to make a change. If your old employer does not allow you to remain with their plan, and you’ve already contributed over $5,000, they must help you roll over the funds into an IRA.

IRA Rollover

One of the more popular choices is to have funds directly transferred into a Roth or traditional IRA, both of which give you more investment options than a standard retirement account. Which one you choose depends on your tax situation and future financial goals. In a Roth IRA, you contribute after-tax earnings, allowing you to withdraw without taxes or penalties after a certain age. A Roth will also enable your savings to grow tax-free. In a traditional IRA, savings become tax-deferred, and withdrawals are taxed as current income. If you’re anticipating a higher income post-retirement, a Roth IRA is probably your best bet.


Perhaps the most popular choice for old retirement plans is to transfer them over to your new employer. Transferring your assets to your new employer’s plan is the best way to maintain tax-deferred status on your savings. Make sure to take the time to research and study both options in detail. Growth potential should be your top consideration. If your old account has better prospects, and you can handle managing multiple accounts, consider staying with your old employer. Pay close attention to access details as well, and if you incur high penalties for withdraws, it may not be worth switching.

Cash Out

The final option for your old retirement plan is to cash out for a lump sum payment. You’ll have direct access to the funds and can immediately pursue different investment vehicles. Depending on your age, you’ll face early withdrawal penalties and a larger tax obligation, so you’ll likely be parting with a sizeable portion of your savings during this process. The benefit is, you’ll have immediate access to your funds and can spend the money however you see fit. Whether you’re paying for emergency medical bills or want to try your hand in the stock market, you’ll be free to spend the money as you please.

Planning for retirement is one of the best things you can do for your financial future – it’s worth your time and money to be familiar with your options. Make sure to review all retirement plan details thoroughly, and speak to a professional or your employer if you have any questions. Keep growth potential at the forefront, as increased gains tend to wipe away any inconveniences of maintaining multiple accounts. A secure retirement can be realized when you make educated decisions with your assets.

Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.