Sit. Stay. Rollover.

With just some basic preparation you and your financial

planner could have your retirement fund trained to

overcome obstacles with the grace of a champion pedigree.

Is it possible to train your retirement plan? We think so.

Maybe youre about to change jobs, change companies, or change your career completely. Whatever

change is a foot, we dont have to remind you how important it is to keep an eye on your retirement funds

during tumultuous times. Assets for your retirement should be able to respond to any possible changes

with ease. All it takes is a little training.

If youre changing jobs and have an existing retirement plan, such as a 401(k), you should already have a

Summary Plan Description in your possession. This will describe your retirement plan and the options

available to you, regarding your old (or, soon to be old) companies plan. You want to share this

document with a financial professional so the two of you can decide what option fits you best. Many

companies have restrictions on what can and cant be done with your retirement fund. As with most

financial planning, a little education goes a long way and knowing the details of your plan will help make

the transition a bit smoother.

Generally, youll have three major options for your retirement fund when

changing jobs. You can withdraw your investment savings and keep the money

as a lump sum (sit), you can leave the money where it is (stay), or you can roll

over your retirement savings into another retirement plan or an IRA. Each

option has its pros and cons. Depending on your situation in life and in your

career, youll want to consult a financial consultant and choose the option that

makes you feel most comfortable.

If you choose to withdraw your money in a lump sum from a previous

employers retirement fund, you must pay taxes on the money you withdraw.

On top of those taxes, your employer is required to take a 20% withholding

from your lump sum, and if you are under age 59 , you may also be forced to

pay a 10% penalty tax. You may roll over the lump sum and avoid the penalty

provided that you deposit the funds in an IRA or another employer plan within

60 days. You will have to make up the additional 20% withheld by your

employer. The 20% withholding will be deducted from your reported income

when your taxes are due.

Leaving the money in your current plan is one option when changing jobs or

companies. However, you must also be aware of any possible regulations

and restrictions your old company has placed on your money in that retirement

If you choose the 401k rollover, you may have the option of rolling your assets into

either an IRA or your new employers plan. However, to avoid paying taxes

and penalties, you should have these assets transferred directly to another

IRA custodian. This rollover will still have to be reported to the I.R.S. One

downside is that your retirement rollover cannot be rolled into a Roth IRA.

However, you may qualify for a Rollover IRA which can than be rolled into a

Roth IRA, but you must meet certain qualifications. Once a Rollover has been

put into a Roth, you cannot roll the Roth into another employee-sponsored

retirement plan.

There are, however, exceptions to the rules of roll-overs for first time homebuyers. If youre emptying out

your former retirement fund and wish to use up to $10,000 towards the purchase of a first home, youre

allowed to do so. You are taxed on the withdrawal, but you do not have to pay the extra 10% early

withdrawal fee. You also have up to 120 days to use the $10,000 on a first-time home purchase rather

than the basic 60 days.

These are just the basic options you may have when changing careers and retirement plans. Deciding

what to do with your retirement savings when changing companies or careers is one of the most crucial

decisions youll make. And by being prepared in advance, youll know when it comes time to confront

change, youll be ready.