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Funding an IRA

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:

1. Roll over your accounts from your prior employers' retirement plans
2. Consolidate your other IRAs into a single IRA
3. Make ongoing contributions

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 isYou 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

 

NEED HELP?
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.

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