An annuity is the only available product that will guarantee income for your entire life. Your future income will grow tax-deferred with an annuity, unlike CDs and savings accounts. Most Trajan Wealth annuities come with fees of 1% or less per year. Plus, you can qualify for up to a 25% bonus just for opening an account, which can be used for income purposes.
With a direct rollover, you have options like an Individual Retirement Account (IRA) or a Roth IRA, which will open up the investment options available. When you had it with your former company, you were restricted on the investment options they offered. With an IRA, dependent on the company you chose to roll it with, you will have virtually an unlimited investment selection. A bigger investment selection is generally a good thing, but it sometimes causes paralysis through analysis and some unsuspecting investors can actually increase their fees and place themselves into investments that aren’t actually very good.
Move it to your new employer’s 401(k) plan – if you’ve changed employers and your new employer plan allows for it. Be sure to evaluate your new employer’s 401(k) plan for options, fees, and ownership rules. Unfortunately, not all employers will allow you to transfer your old account. Your new employer may also have a time frame in regards to eligibility to enroll in the new plan.
Given you aren’t employed by your former employer any longer, you certainly won’t be able to make any additional contributions and you may be stuck dealing with whatever limited services they may provide to ex-employees. Also, you probably won’t have any ability to take a plan loan if needed. But the biggest downside by leaving it with your old employer is that your investments may not be optimized for you and your financial goals.
Before you rush to take the money, consider the following repercussions… they are serious and permanent. You will pay ordinary income on any withdrawal you take. Let’s give you an example, if you earn $50,000 per year in income, and you withdrawal $100,000 from your zombie company retirement plan, you will need to report to the IRS, you made $150,000 that year. Imagine what that will do to your tax bill? Because of that, your old employer will generally withhold 20% right off the top to pay Uncle Sam. We strongly encourage you to get a second opinion since the costs are so high.
