term? Have they held their own during down markets? How much risk will they ex- pose you to? Which ones are best suited for long-term goals like retirement? You may also want to get advice from a financial professional (either your own, or one provided through your plan). He or she can help you pick the right investments based on your personal goals, your attitude toward risk, how long you have until re- tirement, and other factors. Your financial professional can also help you coordinate your plan investments with your overall investment portfolio.
Finally, you may be able to change your investment allocations or move money be- tween the plan's investments on specific dates during the year (e.g., at the start of every month or every quarter).
Know your options when you leave your employer
When you leave your job, your vested balance in your former employer's retirement plan is yours to keep. You have several options at that point, including:
Taking a lump-sum distribution. This is often a bad idea, because you'll pay income taxes and possibly a penalty on the amount you withdraw. Plus, you're giving up continued tax-deferred growth.
Leaving your funds in the old plan, growing tax deferred (your old plan may not per- mit this if your balance is less than $5,000, or if you've reached the plan's normal re- tirement age--typically age 65). This may be a good idea if you're happy with the plan's investments or you need time to decide what to do with your money.
Rolling your funds over to an IRA or a new employer's plan if the plan accepts roll- overs. This is often a smart move because there will be no income taxes or penalties if you do the rollover properly (your old plan will withhold 20 percent for income taxes if you receive the funds before rolling them over). Plus, your funds will keep growing tax deferred in the IRA or new plan.
Ronit Rogoszinski CFP®, is a LPL financial planner with Arch Financial Group and specializes in working with individuals transitioning though major life changing events. The information in this article is based on a CFP Board brochure, “What You Should Know About Financial Planning.” It is available free at 1-800-487-1497 or
www.CFP.net. Founded in 1985, the CFP Board is a nonprofit certifying organization that owns the CFP® certification marks in the U.S. and benefits the public by fostering professional standards in personal financial planning.
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
May 2012 19 Kalon Women Magazine
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