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Understanding your Distribution Options 

Stay Invested

When you leave your employer, you have several choices to make with your retirement plan. You can take a cash distribution of your retirement savings. But if you do so, you will generally have to pay taxes on the distribution and a possible 10% premature distribution penalty tax if the distribution is taken before you turn 59½, or leave your current employer prior to turning age 55.

The contributions in your retirement plan have been protected from current taxes and the earnings have been tax-deferred. Or, if you have made Roth type deferrals you have paid income tax on the contributions. However, qualifying Roth distributions are tax-free. One of the best things you can do is protect your plan’s tax status and let it continue to grow for your future financial security.

If you decide to keep your money working in a tax-advantaged account for your retirement, there are generally three ways to do so. You can:

  • Keep your investments in your former employer’s plan;
  • Roll your investments into to a new employer’s plan; or
  • Roll your investments into an IRA.

Each choice has potential benefits, as well as issues you’ll need to consider before making any decisions.


Professional guidance

Your RBC Wealth Management financial advisor can help you understand your options and recommend strategies in keeping with your goals. Additional benefits of working with an RBC financial advisor include:

  • Premier service from your own dedicated financial advisor.
  • Personalized investment solutions with your choice of a wide range of investments including mutual funds, stocks, bonds, FDIC-insured CDs, cash sweep options and managed accounts.
  • Professional guidance to help you choose your investments.
  • Retirement planning for you and your family that considers your total financial health.

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Avoid early withdrawal tax consequences

Withdrawing 401(k) assets before retirement age can be costly. Avoid paying income taxes and a potential IRS penalty on your savings with a direct rollover that also gives you more control over your retirement assets.


Retirement plans for business owners

Establish a tax-advantaged retirement plan for you and your employees.

 Learn more