- Thought Leadership
Now that you've decided to use an IRA as a tool to help you save for your retirement, let's take a quick look at how you might fund it. The following are funding options for your consideration1:
Roll over your accounts from your prior employers' retirement plans –When you leave a job, you'll want to decide what to do with any retirement savings you've accrued in a 401(a), 401(k), 403(b) or eligible governmental 457(b) plan sponsored by your former employer. In general, you may have one or more of the following options:*
• Roll the money into a traditional IRA –You may roll over your entire account balance or just a portion of it to a traditional IRA, such as Empower Retirement IRA.
• Roll the money into a Roth IRA – You may roll over your savings into a Roth IRA, such as Empower Retirement IRA. A rollover of your designated Roth savings within a 401(k), 403(b) or a governmental 457(b) plan to a Roth IRA is not subject to taxes. You can also roll over into a Roth IRA all or a portion of eligible distribution you receive from your employer's retirement plan that was accumulated on a before-tax basis. However, such a rollover into a Roth IRA is subject to ordinary income tax. For more information, please consult with your financial advisor.
• Roll the money into an eligible plan offered by your new employer – You may roll over your balance, partially or wholly, to another 401(a), 401(k), 403(b) or eligible governmental 457(b) plan if your new employer's plan accepts such rollovers.
• Leave the money where it is – You may keep your money invested in your employer-sponsored retirement plan where it will continue to grow tax-deferred until the time you are required to take distributions (subject to the terms of your plan).
• Take the money in cash – You may have an option of cashing your retirement account. However, by withdrawing your retirement assets you may lose an option to continue to accumulate your retirement assets on a tax-deferred basis, and your cash distribution is subject to ordinary income tax in the year of a distribution. Also, if you are younger than 59½, an additional 10% early withdrawal tax penalty may apply.2
Consolidate your other IRAs into a single IRA – Consider consolidating your other IRAs into one IRA account (or, if applicable, into two accounts – a traditional IRA and a Roth IRA) such as the Empower Retirement IRA.
Make ongoing contributions – As soon as you set up your traditional or Roth IRA, you can contribute to your account as long as you receive taxable compensation. If you elect a traditional IRA, you may continue to contribute until you reach age 70½. If you elect a Roth IRA, you may make contributions regardless of your age; however, be aware that your contributions may be limited by your income. For detailed information regarding making ongoing contributions, see Roth vs. traditional IRA.
Open an IRA – Empower Retirement IRA
Please consult with your financial advisor, call (877) 804-6257 to speak to a retirement consultant, or
email us at RetirementSolutionsCenter@empower-retirement.com.*
1 Prior to making any decision in regards to funding your IRA, you may want to consult with your tax or financial advisor.
2 Withdrawals are subject to ordinary income tax. A 10% early withdrawal penalty may apply to withdrawals made prior to age 59½ unless withdrawals qualify for another exception to the 10% early withdrawal penalty. The 10% early withdrawal penalty does not apply to eligible governmental 457(b) plan withdrawals.
* Representatives of GWFS Equities, Inc. are not registered investment advisers, and cannot offer financial, legal or tax advice. Please consult with your financial planner, attorney and/or tax adviser as needed.