A lot of people contribute into the 401(k) plan that is offered at work, and this is one of their fundamental retirement planning tools. It should be emphasized that it is definitely a good idea to participate, and if your employer is offering to match your contributions, the wise course of action is to take advantage of this opportunity and contribute the maximum amount of the match.
Though economic indicators appear to be improving at the present time, over recent years a lot of people have been separated from their jobs, and as a result they have questions about their 401(k) plans. What does happen to your 401(k) if you get laid off?
The answer is that the choice is yours. You may be able to keep your existing 401(k) even after you lose your job, but of course contributions would not be coming out of your paycheck anymore and you may find it difficult to get anyone to help you service the account. Costs that were previously absorbed by your employer could be shifted to you as well.
You are allowed to cash out the account if you would like to do so. However, if you are under 59 1/2 years old, you’ll have to pay a 10% penalty to go along with the 20% tax that will be levied.
The third possibility would be to do a direct or indirect rollover into an individual retirement account or into another 401(k) account if you get reemployed in short order.
If you are ever wondering how to stay on track for retirement after an unexpected event takes place like the loss of your job, professional guidance can be of great assistance. If you retain the services of an experienced San Jose retirement planning lawyer to devise your long-term plan for aging, he or she will always be available to answer questions.
- Community Shred Day 2022 (VIDEO) - May 11, 2022
- California Probate Thresholds (VIDEO) - April 29, 2022
- Interview with Dementia Counselor Tami Anastasia Part Three – Communication and Dementia (VIDEO) - April 27, 2022