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Retirement Plan Options When Leaving an Employer
Keeping your money working harder for you may be easier than you might think
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Browse Options & Pros vs. Cons
Leave the Money in Your Former Employer's Retirement Plan
This may be an option, depending on your former employer’s retirement plan; check with the plan administrator.
Pros:
- Consistency (investment choices may remain the same. You may also consider different investment alternatives within the plan)
- Maintain tax-deferral of your investment
- No immediate withdrawal penalties[1]
- No immediate income tax obligations[1]
- Ability to move money to a rollover IRA or to a new employer’s retirement plan at a later date
Cons:
- Dependent upon former employer permitting money to remain there
- May need a minimum $5,000 balance to be eligible
- Limited investment options
- Limited access to your money
- Inability to make additional contributions
- Loans are not permitted
- Required Minimum Distributions are triggered by your attainment of age 73, up from 72 (the RMD age as of 2019)
Roll the Money Over to a Rollover IRA
Assets can be rolled into an IRA at any financial institution, and can continue to be invested tax-deferred.
Learn more about rollovers at PNC Investments »
Pros:
- No immediate income tax obligations, no withdrawal penalties with a direct rollover[1]
- Maintain tax-deferral of your investment
- Potentially larger selection of investment options, and full control over investment choices
- Consolidating retirement assets can make them easier to track
- Potential to convert rollover IRA to Roth IRA
- Potential to rollover money to a new employer’s retirement plan at a later date (unless money is combined with other IRA assets)
Cons:
- IRAs do not permit loans
- Required Minimum Distributions are triggered by your attainment of age 73, up from 72 (the RMD age as of 2019, non-Roth IRAs)
- Risk of higher costs
IRA Selection Tool
Need help choosing an appropriate IRA for you? Use this tool to find out what kind of IRAs you may be eligible for, and compare the pros and cons of each type.
Roll the Money Over to a New Employer's Retirement Plan
This may be an option, depending on your new employer’s retirement plan; check with the plan administrator.
Pros:
- Ability to consolidate retirement assets from more than one plan, and build assets through continued contributions
- Maintain tax-deferral of your investment
- No immediate withdrawal penalties[1]
- No immediate income tax obligations[1]
- Potential for larger selection of investment options
- Potential to take loans (if plan permits)
Cons:
- Risk of fewer investment options
- Risk of limited access to your money
- Required Minimum Distributions are triggered by your attainment of age 73, up from 72 (the RMD age as of 2019) (unless you are still working for the sponsoring employer and your plan allows RMDs to commence at retirement, if later)
Receive a Lump-Sum Distribution (Cash-out)
Depending on your age and account balance, taxes and penalties may deplete a large component of your savings.
Pros:
- Money is available immediately
- No early withdrawal penalty IF you’re age 59½ or older
Cons:
- Substantial amount of account balance is consumed by income taxes (and penalties, if you’re younger than age 59½)
- Risk of not having enough money when you need it in retirement
- No more tax-deferral of your investment
- Distribution (i.e. additional income) could push you into a higher tax bracket for the year in which the money is withdrawn
Understanding Rollover IRAs
Explore options for what to do with your
401(k) when leaving an employer.
Find a PNC location near you and stop by to see us.
Associated Products & Services
The following information may be provided by PNC Investments affiliates, including PNC Bank, PNC Private Bank℠ or PNC Institutional Asset Management®:
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Important Legal Disclosures & Information
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Withdrawals will be taxed at current rates. Early withdrawals prior to age 59 1/2 may be subject to a 10% penalty tax.
Be sure to consider the impact of fees and expenses in connection with the different options described above and consult with your personal tax advisor before making any decisions.
When making the decision to roll over a 401(k) account to an IRA, please consult your tax or legal advisor regarding any tax or other implications, and consider that investment choices and retirement payment options between the accounts will differ, and other costs and expenses may differ.
This material is meant to educate and not to provide legal, tax, accounting or investment advice. PNC Investments and its affiliates and vendors do not provide legal, tax or accounting advice.
Important Investor Information: Brokerage and insurance products are:
Not FDIC Insured • Not Bank Guaranteed • Not A Deposit
Not Insured By Any Federal Government Agency • May Lose Value
Securities products and brokerage services as well as managed account advisory services to US based clients are offered by PNC Investments LLC, a registered broker-dealer and a registered investment adviser and Member FINRA and SIPC. Managed account advisory services for non-US based clients are offered by PNC Managed Account Solutions, Inc., a registered investment adviser. Annuities and other insurance products are offered through PNC Insurance Services, LLC, a licensed insurance agency (CA License #0B57695).
PNC Investments, PNC Insurance Services and PNC Managed Account Solutions do not provide legal, tax, or accounting advice.
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