If a participant takes a job with a new employer, can retirement savings be protected from taxes?
Yes. There are three options that will preserve the tax deferred status of the account assets. First, if there is more than $5,000 in the participant’s account, the assets may be left in the prior employer’s plan where the money will continue to accumulate earnings. Second, depending on the provisions of the plan at the new employer, assets may be rolled over into the new plan. Refer to your summary plan description. The third option is a “rollover IRA” that allows participants to move the entire balance of the plan into an IRA. Often, a rollover IRA is used as a conduit to move assets from one employer’s plan to another employer’s plan. IRA rollover accounts may never be comingled (mixed) with assets of personal IRA accounts.
Related Questions
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