document.write('<p><b><font class="heading">Changing Jobs? Don’t Forget Your 401(k)</font><br><font class="text"><i>Misstep Can Cost You');
document.write(' Thousands In Extra Taxes, Penalties</i></b></p><p>One of the most important questions you face when changing job is w');
document.write('hat to do with your 401(k) money. Making the wrong move could cost you thousands of dollars or more in taxes and lower r');
document.write('eturns.</p><p>Let’s say you put in five years at your current job. For most of those years, you’ve had the company tak');
document.write('e a set percentage of your pre-tax salary for your 401(k) plan. Now that you’re leaving, what should you do?</p><p>The');
document.write(' first rule of thumb is, it’s wisest not to touch the money.</p><p>The worst thing employees can do when they leave th');
document.write('eir employer is to withdraw money from their 401(k) plans and then keep it.</p><p>If you decide to have your distribut');
document.write('ion paid to you, the plan administrator will withhold 20% of your total for federal income taxes. So if you had $100,000');
document.write(' in your account and you wanted to cash it out, you’re already down to $80,000.</p><p>And if you’re not yet 59 1/2, yo');
document.write('u’ll get a 10% penalty slapped on for early withdrawal. So now you’re down another 10% from the top line, to $70,000.</p');
document.write('><p>Then at the end of the year, you’ll have to pay the difference between your tax bracket and the 20% already taken ');
document.write('out. That’s because distributions are taxed as ordinary income. For instance, if you’re in the 33% tax bracket, you’ll s');
document.write('till owe 13%, or $13,000. Now your cash distribution is worth $57,000.</p><p>That’s not all. You might have to pay sta');
document.write('te and local taxes. After all that, you could end up with little over half of what you had saved up.</p><p>What’s more');
document.write(', if you decide after 60 days to roll over your remaining balance, the government won’t let you.</p><p>When you cash o');
document.write('ut, you take that hit (from penalties) and you short–change your retirement savings.</p><p><b>&nbsp;<br>Let’s Look At ');
document.write('The Alternatives</b></p><p>Before you touch your 401(k), find out if you new job offers a retirement plan. It’s easy t');
document.write('o roll your account into the new plan. Contact your former plan administrator for the forms.</p><p>The best method is ');
document.write('to have the money sent directly from you old 401(k) plan to the new one. With the direct transfer, you never receive a c');
document.write('heck. Direct transfers let you avoid the taxes and penalties mentioned above. Your savings will continue to grow tax-def');
document.write('erred until you retire.</p><p>One word of caution: You may not be able to participate in the new plan right away, so b');
document.write('e sure to check on that. Many employers require you work a minimum of a few months before you can start your 401(k).</p>');
document.write('<p>One solution: Stay with your former employer’s 401(k) plan until the new one is available, then rollover into the n');
document.write('ew one. Most plans let former employees leave their assets several months in the old plan.</p><p>&nbsp;<br><b>Don’t Pa');
document.write('nic</b></p><p>If you have your former employer make the distribution check out to you, the Internal Revenue Service co');
document.write('nsiders this a cash distribution. The check you get will have 20% taken out from your vested amount for federal income t');
document.write('ax.</p><p>But don’t panic. You have 60 days to roll over the lump sum (including the 20%) to your new employer’s plan ');
document.write('or into a rollover individual retirement account. Then you won’t owe the additional taxes or the 10% early withdrawal pe');
document.write('nalty.</p><p>If you’re not happy with the fund choices your new employer offers, you might opt for a rollover IRA inst');
document.write('ead of your company’s plan. You can then choose from hundreds of funds.</p><p>You have more control over the money, th');
document.write('erefore, in an IRA. But again, to avoid the withholding hassle, use direct rollovers.</p><p>&nbsp;<br><b>Leave It Alon');
document.write('e</b></p><p>If your vested account balance in your 401(k) is more than $5,000, you can usually leave it with your form');
document.write('er employer’s retirement plan. Your lump sum will keep growing tax-deferred until you retire.</p><p>Check with your fo');
document.write('rmer employer to get the details. If your plan won’t let you stay and your new job doesn’t have a 401(k), your best bet ');
document.write('is to do a direct rollover into an IRA.</p><p>Perhaps you’ve decided to work for yourself or prefer to manage your mon');
document.write('ey yourself. If so, you could roll over your distribution into an IRA. You’ll also avoid having to pay the stiff cash wi');
document.write('thdrawal fees.</p><p>Corporate America and the financial services industry have done everything possible to make this ');
document.write('a painless and easy process.</p><p>Once you turn 59 1/2, you can begin withdrawals from your 401(k) plan or IRA withou');
document.write('t penalty. Your withdrawals will be taxed as ordinary income.</p><p>You don’t have to start taking withdrawals from yo');
document.write('ur 401(k) unless you retire after age 70 1/2. With an IRA you must begin a schedule of taxable withdrawals based on your');
document.write(' life expectancy when you reach 70 1/2, whether you’re working or not.</p>');