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Fired Laid off New Job What's So Great About a Rollover

Fired Laid off New Job What's So Great About a Rollover

April 20, 2022

Fired Laid off New Job What's So Great About a Rollover

[00:00:00] Jason Fuchs: I'm wondering ladies and gentlemen, have you been laid off? Did you find a new job? Are you still looking for a new job I'm wondering ladies and gentlemen, have you been laid off? Changing jobs that can be a tumultuous experience, even under the best circumstances, making a career move? It requires a series of tough decisions, not the least of which is what to do with the funds in your old employer, sponsored retirement plan.

[00:00:25] If you've lost a job, or if you're changing careers, you may be wondering what to do with your 401k plan account, and it's essential to understand your options.

[00:00:35] After today's episode, ladies and gentlemen, you'll have clarity on what to do with those old 401k accounts. And Hey, if it's not a 401k, but it's still with a previous employer that counts too. [00:01:00]

[00:01:12] Greetings everyone. If you're new here, I'm Jason Fuchs, married to Amber bothered to a three-year-old girl Juul. I also happen to be the managing director of Sage path, financial advisors, ladies and gentlemen. Welcome to the show. Thank you for being here. Dad's sense is a show for family, men and women, and we're all about family, food, fun and finance.

[00:01:32] Joining me is special guest, Amber Fuchs, mom and wife. Extraordinary. Welcome to the show. Amber, thank you for having me. It's our pleasure to be back. I'm excited to be here. Maybe I should just call you a permanent cohost.

[00:01:48] Amber Fuchs: No, I think it should be like everything that Heather Locklear has ever done. She's always the special guests, even if she's on there.[00:02:00]

[00:02:00] Jason Fuchs: I know you could be doing other things right now. You don't get paid to be on here. So thank you for being here. We appreciate you. I'm happy

[00:02:07] Amber Fuchs: to be here. I'm so glad that you still want me to join.

[00:02:12] Jason Fuchs: And that goes for you as well. Ladies and gentlemen, we all have a limited amount of time every day and you choose to be here.

[00:02:19] That means the world. Thank you so much. And ladies and gentlemen, if you've got questions, remember I'm answering one during each episode. And Hey, your question isn't answered during an episode of dads sense, don't fear. I will privately respond to your question. You're not alone. I'm here to help send those questions to info at Sage path,

[00:02:41] I'll put that in the description of the. As well today's question comes from bunny. Ooh, I like that name. That's right. Juul requested. I used the name bunny for this episode. So we're running with it makes sense. But he was laid off during COVID he's found a job sense, [00:03:00] but the displacement helped him realize how many retirement accounts he has through former companies he's worked for.

[00:03:06] And guess what, Amber, he has no idea how to connect. Well, and I'm wondering ladies and gentlemen, have you been laid off? Did you find a new job? Are you still looking for a new job changing jobs that can be a tumultuous experience, even under the best circumstances, making a career move? It requires a series of tough decisions, not the least of which is what to do with the funds in your old employer, sponsored retirement plan.

[00:03:35] If you've lost a job, or if you're changing careers, you may be wondering what to do with your 401k plan account, and it's essential to understand your options. And Hey ladies and gentlemen, if it's not a 401k, if it's a 401k, a four three B a 4 57,

[00:03:51] I can name all kinds of acronyms for employer sponsored plans. After today's episode, ladies and gentlemen, you'll have clarity on what to do [00:04:00] with those old 401k accounts. And Hey, if it's not a 401k, but it's still with a previous employer that counts too.

[00:04:07] What do you think, Amber?

[00:04:08] Amber Fuchs: I I'm just thinking. That sounds great. And I know you helped me a lot cause I had a four, three B previously, speaking of a different acronym and. It is it's a lot today gone. So I'm glad you're covering this.

[00:04:24] Jason Fuchs: Just trying to keep an eye on all the statements. You get emails, you get trade confirmations, you get voting confirmations, you get your statements, you get your tax documents.

[00:04:35] And that's just a whole lot of paperwork to track for one account. I was working with a gentleman the other day, nine retirement account. From previous employers. Can you imagine the amount of mail that person's getting or emails it's insane. Absolutely. Very overwhelming.

[00:04:51] Well, we'll get into that in the Q and a portion of the show, but Amber, as always, I want to know what is [00:05:00] happy and good. And fun in your world.

[00:05:05] Amber Fuchs: Oh, well, let's see. I've been thinking about it. There's a lot of good things right now. but I think the thing I'm the most excited about and overwhelmed as well is that I do have some new business opportunities coming up and I think that I will.

[00:05:23] Be excited to see them come to fruition and it's going to be a lot of work. So I'm also overwhelmed, but, I have a lot of cool things queued up that are coming together that I've been working on

[00:05:36] Jason Fuchs: for a long time. Yeah. Very long time. And we, ladies and gentlemen, we're not going to get into the details today because we're still in the final works of getting all this.

[00:05:46] Taking care of yeah.

[00:05:48] Amber Fuchs: We are at a place where you can say it's happening. And, it's really exciting.

[00:05:54] Jason Fuchs: Well, you've accomplished a lot and Julia and I are so proud of you. Thank you. Just seeing all of the [00:06:00] work you've put into this all the time. Coming to fruition. It's so exciting. Yeah.

[00:06:04] Amber Fuchs: Thank you so much. I'm I am really excited. So I

[00:06:07] Jason Fuchs: know our listeners out there are probably thinking, okay, what gives we'll talk about it in our next episode, or maybe even the episode after

[00:06:15] Amber Fuchs: that.

[00:06:15] I'm just super excited about all the things we get to do in spring.

[00:06:19] And. One of the things we have coming up, we'll be in a couple of months, Juul, we'll start swim lessons again. Yeah. I just love seeing all the things she's doing and developing and seeing what she's really excited about. And then swimming is definitely one

[00:06:35] Jason Fuchs: of them. Oh my gosh. Gymnastics though.

[00:06:38] That's probably the highlight of Juul's life right now. Right? Jewel is such a positive three-year-old. She's so happy. She's so goofy, always trying to make us laugh. She's incredibly helpful. But I've never seen her smile so big for any other activity out there. Not even when she saw Santa or we went and did the [00:07:00] bunny photos.

[00:07:00] Well, the bunny photos, he was very happy, but yeah, gymnastics she's just smiling ear to ear bouncing around, jumping around. It's really

[00:07:08] Amber Fuchs: neat. Yeah. I love it. Her favorite so far are the rings and the trampoline. And I told her, before her last gymnastics lesson, I took gymnastics when I was her, about her age, when I was very young and my favorite was the uneven bars.

[00:07:27] And so in this last lesson, she really tried to get into it with the uneven bars

[00:07:34] Jason Fuchs: and yeah,

[00:07:35] Amber Fuchs: but she still preferred the rings and the trampolines in the bar. It was cute though, that she really, she wanted to. Enjoy it more because I had shared with her that that was my favorite. It's so neat to those type of things that she catches on to it and remembers and tries to incorporate it.

[00:07:55] And the things that she does, she's a very thoughtful. Three-year-old

[00:07:59] Jason Fuchs: and it's so [00:08:00] fun to see her thriving through all of our activities and the new developments going on with

[00:08:04] Amber Fuchs: her. Yep, absolutely. So

[00:08:06] I think two activities is more than enough.

[00:08:08] And if she said she wanted to do that, then we would figure out a way to

[00:08:13] Jason Fuchs: do it.

[00:08:13] That's how we got to gymnastics. Yeah.

[00:08:17] Amber Fuchs: So Jason, what are you excited about these days?

[00:08:22] Jason Fuchs: That one got me the look on your face.

[00:08:24] Ladies, gentlemen, you can't see it, but Amber has got this goofy look on her face every now and then it just gets me.

[00:08:29] What am I excited about these days? There's a lot to be excited about. We've got a lot of really great things going on for our family. Sage path is thriving. Your businesses are thriving. I'm excited about all of those things. Spring is in the air. We're able to get out and do some really neat activities as a family like that strawberry picking we do with your parents and Juul.

[00:08:49] Amazing. We've got some blueberry picking we're going to do. So I'm really excited for all of these new things that we're going to be doing and spending time together as a family. I always have a ton of fun with that. [00:09:00] I just celebrated my 200th skydive. Oh yeah. Huge. That's so cool. And ladies and gentlemen, I just started skydiving last August.

[00:09:13] So August of 2020. And I'm already up to 203 jumps,

[00:09:18] Amber Fuchs: and it's now April of 2020,

[00:09:22] Jason Fuchs: so we're not even a year into it. That's so cool. Congratulations. Thank you so much. Sunday was a really great day. I actually got 10 jumps in one day. Yeah, that's the most I've ever done in one day I had someone packing my parachute because ladies and gentlemen is really hard to jump 10 times in one day and pack your own.

[00:09:41] And I'll be honest, Amber, I didn't feel like packing my parachute. So we have what are called Packers at the drop zone and their job is all they do is pack parachutes. They do a great job. They're incredibly safe. And I remember after my 10th jump, coming into the packing area to get my [00:10:00] parachute. And one of the Packers asked, how many did you get in today?

[00:10:04] And I laughed and smiled and said 10. And the whole room started cheering and applauding. It was amazing. So I guess 10 jumps in one day. Isn't a typical thing. Matter of fact, I don't think all 10 people or people jumped 10 times in their entire lifetime. I'm incredibly blessed to do that. you're great because you support this activity.

[00:10:28] It's not like I get to go skydive whenever I want. We've got a schedule. It, somebody has got to be there for Juul. It's a family thing, even though I'm the one jumping out of the plane. So thank you so much for your support.

[00:10:39] Amber Fuchs: Yeah. Yeah. I like seeing you happy, so it's my

[00:10:41] Jason Fuchs: pleasure. And I might go tomorrow, so I'm really excited just thinking about it.

[00:10:47] Well, I'm starving, Amber, where are we going for lunch? Ooh,

[00:10:50] Amber Fuchs: I have some ideas. Okay,

[00:10:54] Jason Fuchs: kidding aside. You ready to cover the food portion of the show apps? Always. Right. I got a neat recipe. I want to [00:11:00] share with everybody. Let's get into it now. Okay.

[00:11:02] Welcome back, ladies and gentlemen, Easter is almost here. And I have a special recipe. I'll be trying. Yes. I call it the simple pork loin recipe. Ooh. And I call it simple because it is simple. I mean, all you need is a good pork rub. You can use salt and pepper if you want. And six pounds of pork loin.

[00:11:35] Yeah, heat your grill to 3 25. I use a rec tech pellet grill. So it's like a smoker grill I call it simple because I call it simple because it is simple. All you need is a good pork rub. You can use salt and pepper if you want. And six pounds of pork loin.

[00:11:54] Yeah, heat your grill to 3 25. I use a rec tech pellet grill. So it's like a smoker grill [00:12:00] combo and rather a charcoal or propane. It actually uses these wood pellets to create heat. It's an amazing grill. I love that thing, Amber. I'm so excited because spring's here and I'm going to be outside grilling more often.

[00:12:12] Now. You don't have to have a pellet grill for this recipe.

[00:12:16] You can use a regular charcoal grill, propane grill. Just make sure you keep that heat 3 25 consistently while you grill it, it takes only 70 or 80 minutes to cook. You want to wait until the internal temperature is about 145 degrees. And then after that you let the meat rest for 30 minutes slice away and you're done.

[00:12:37] Sounds delicious. Yeah. We're going to try it this weekend for Easter. I'm excited. Yeah, me too. Your parents are gonna bring the sides. I'll provide the pork and we're going to pick out. Awesome. All right. You ready for some Q and a I'm ready. All right, let's get into it now. Let's go bunny. All right.

[00:12:55] [00:13:00] And we're back, ladies and gentlemen, thank you again for joining us for the Q and a portion of the show.

[00:13:09] Bunny says awesome show, bro. I love the episode about taxes and retirement. Wow. Bunny. So nice of you to say thank you. We appreciate you. You appreciate all of our listeners out there. we could not do this show without you, so thank you so much. Bunny continues. I lost my job during COVID and quickly found another job, but that this placement made me realize that, Hey, I have all of these retirement accounts from former employees floating around the mail I receive for each of these accounts is too much.

[00:13:42] The emails are too much that I just can't keep track of all this stuff. Is there any way to combine everything into one place? Great question. In fact, I hear this fairly often. I asked this earlier, ladies and gentlemen, but I'm still wondering, [00:14:00] have you been laid off? Did you find a new job? Are you still trying to find a new job?

[00:14:05] Changing jobs is, is a very overwhelming experience. Even under the best circumstances when you're making a career move, you are required to make so many tough decisions. And one of those tough decisions is what do I do with the funds in my old employer, sponsored retirement plan, ladies and gentlemen, if you lost your job, if you're changing careers, what do you do with that 401k?

[00:14:33] Well, I think it is essential. For you to understand your options. And after today's episode, you'll have more clarity on what to do with those retirement accounts. You ready to get into it?

[00:14:43] Amber Fuchs: Amber I'm ready. I've been in all of the scenarios. You just lay out. I

[00:14:47] Jason Fuchs: know you had, we had to jump through hoops to get your stuff moved over.

[00:14:53] And

[00:14:53] Amber Fuchs: mine was very scattered as

[00:14:54] well.

[00:14:55] Jason Fuchs: So there's one company that makes it very, very difficult. I'm not going to out them on this show, [00:15:00] but

[00:15:01] Amber Fuchs: thank goodness. I have a financial advisor to help me with. Challenging issues.

[00:15:09] Jason Fuchs: So ladies and gentlemen, if you leave your job voluntarily or involuntarily, you'll be entitled to a distribution of your vested balance and your vested balance always includes your own contributions.

[00:15:22] Pre-tax after tax Roth and typically any investment earnings on those amounts. It also includes employer contributions and earnings that have satisfied your plans. Vesting schedule. Some plans can make you wait months or years, even before you're fully vested.

[00:15:40] Other plans can have fast or vesting schedules and some even have a hundred percent immediate vesting schedules. You'll also be 100% vested once you've reached a retirement plans, normal retirement. It is essential for you to understand how your [00:16:00] particular plans vesting schedule works because you'll forfeit any employer contributions that have not vested by the time you leave your job and who doesn't want free money, right.

[00:16:09] Amber? Oh, absolutely. Now your summary plan description, or S P D for short, it's going to spell out how the vesting schedule for your particular plan. If you don't have one, you can ask your plan administrator for one, or you can reach out to someone in HR. If you're on the cusp of vesting, it may make sense to wait a bit before leaving.

[00:16:33] If you have that luxury. Of course, five years ago, when I left a very large firm to start Sage path financial advisors, I had a vesting schedule and I forfeited a lot of retirement money to make the move. But it required me to stay for three more years and I just couldn't do it three years is a long time.

[00:16:55] So sometimes it's just not possible to wait. Right. It's not like it's three weeks. [00:17:00] Exactly. So now you know what money you can take with you now? What should you do with it? I am so glad you asked Amber, some people choose to roll over these funds into an individual retirement account IRA for short and for a good reason, about 34% of all retirement assets in the U S are held in.

[00:17:24] Hmm. I didn't know that. Yeah. And 59% of traditional IRA owners, they funded all or part of their IRAs with a rollover from an employer sponsored retirement plan. Hmm. Yeah, it's pretty neat. Huh? Ladies and gentlemen, bunny, Amber bunny gets me. I love it. I'm going to have to let Juul listen to this episode.

[00:17:47] Generally, you have four choices when handling the money in a former employers retirement account. We're going to review those now. You ready? Amber's ready. All right. First you can cash out of the account and [00:18:00] this is something I don't recommend. If you choose to cash out, you need to be very careful. You may be required to pay ordinary income tax on the balance.

[00:18:10] Plus a 10%. Early withdrawal penalty if you're under 59 and a half. And I know that is your favorite number and it

[00:18:18] Amber Fuchs: is 59. I was waiting for the retirement age to come up because I love the

[00:18:22] Jason Fuchs: half age. Thank you. Notice the smirk on my face as I said it ERs. Yes.

[00:18:29] That's right.

[00:18:29] You're paying the IRS 10% just to take your money. And on top of that, you're going to pay income taxes on the distributor. No. Thanks. Yuck. The second option, you may be able to leave the funds in your old plan, but some plans have rules and restrictions regarding the money in the account. I have a question, Amber.

[00:18:52] Okay. If you've been let go, or if you've left your former company voluntarily, why would [00:19:00] you leave your retirement account with them as.

[00:19:05] Amber Fuchs: The only reason I can think of is if you just love talking to the company, you're leaving so much.

[00:19:13] Jason Fuchs: I don't know many people that enjoy talking to their form or company when they.

[00:19:18] Amber Fuchs: Yeah, no, I, I, I don't know.

[00:19:20] Jason Fuchs: I don't think you would. I don't think so. Either you take your stapler, you take all your pictures. Why wouldn't you take your retirement money with you to,

[00:19:29] Amber Fuchs: yeah, absolutely. I mean, I have to be honest and you know, this very well that I've left some of my retirement accounts with my former employer.

[00:19:38] Simply because I didn't know what to do with them. Exactly. Yeah. And it was just easier to leave the money there then to figure the next thing out. And you helped me with that. So I was lucky.

[00:19:50] Jason Fuchs: I'll never forget. In 2012, I had a client come to me. He worked for MITRE and we rolled his 401k over into an IRA.[00:20:00]

[00:20:00] This client sold in oh eight at the very bottom. And he never got back into the market. He missed out on almost 300, 400% growth. Yeah. So that's another problem. People just don't know what they're supposed to do. Right, right.

[00:20:16] Amber Fuchs: Exactly. That's why we're

[00:20:18] Jason Fuchs: listening to you now. Oh, thank you.

[00:20:22] And thank you ladies and gentlemen, I appreciate everybody now. Third, you can roll over the assets to your new employer's plan. If one is available and rollovers are permitted. Fourth, you can roll the money into an IRA. Now, this is typically your best option. In my opinion,

[00:20:41] generally speaking rollovers, they may preserve the tax favored status of your retirement money. And when I say rollover to your current employer's plan, 401k or the IRA, you can avoid a taxable event. If your money is moved through, what's called a direct trustee to trustee transfer. [00:21:00] Now, all that means is you're taking money from the 401k and it's being sent directly to the other four one.

[00:21:05] Or it's being sent directly to the IRA. Does that make sense? Yes. In a traditional IRA, your retirement savings is going to have the opportunity to grow tax deferred until you taking distributions in retirement. Now, what does tax deferred mean? Well, you put the money in the account, it grows tax-free and then when you take the money out in retirement, you start paying taxes on it.

[00:21:29] It gets added to your ordinary income and based on your ordinary income. That's your tax rate on that money. Make sense? All right. Rollovers can most certainly make it easier to stay organized and maintain control over your money. Now this is retirement money. Bunny and ladies and gentlemen, but it's your money, right?

[00:21:53] Wouldn't you want to have control over that money? Of course, absolutely. Now some people change jobs several [00:22:00] times during their careers and they leave a trail of employer sponsored retirement plans in their wake. You've seen this, right? Yeah. And by rolling these various accounts into a single IRA, you might make the process of managing the funds, rebalancing your portfolio and adjusting your asset allocation.

[00:22:18] Way easier keep in mind, the IRS has published guidelines on IRA rollovers. For example, you generally cannot make more than one rollover from the same IRA within one year. You also can not make a rollover during this one year period from the IRA to which the distribution was rolled over.

[00:22:40] Interesting. Follow me. Oh, it's complicated. And that's why it's so important to work with a professional.

[00:22:48] An IRA rollover. It might make sense when you're leaving one job for another or retiring altogether,

[00:22:54] Now, want to remind investors? FINRA wants to remind investors as well. We love [00:23:00] regulators here right before deciding whether to retain assets in a 401k or rollover to an IRA and investors should consider. Various factors, including, but not limited to investment options, fees and expenses, services, withdrawal, penalties, protection from creditors and legal judgements.

[00:23:21] We also want to think about required minimum distributions or RMDs and possession of employer stock. That makes sense.

[00:23:30] Amber Fuchs: Kind of, but I also have you to help me understand it.

[00:23:34] Jason Fuchs: We'll talk about it offline. I am your advisor, but I want to make sure that you understand everything we're

[00:23:40] Amber Fuchs: doing well. Any of these type of moves that we've made,

[00:23:44] Jason Fuchs: I have understood.

[00:23:45] Well, thank you. Yes, I'm doing something right? Yes. Non IRA rollover. It might make sense whether you're leaving one job for another, or if you're retiring. But how your assets should be allocated within the IRA [00:24:00] will depend on your time, horizon, your risk tolerance, your financial goals, and ladies and gentlemen, bunny.

[00:24:05] If that's something you need help with, please reach out to me. We're, we're pretty good at that. All right. How are you feeling Amber? I'm feeling

[00:24:14] Amber Fuchs: good and you have more tips.

[00:24:16] Jason Fuchs: We are actually about to wrap this.

[00:24:18] Amber Fuchs: Okay. I have a question for you. You didn't cover this in your tips. Okay. What if, when you're leaving your company and you have the retirement funds, instead of doing anything you just suggested, you just want to take that money and make it rain.

[00:24:39] Jason Fuchs: I think making it rain falls on option number one, which I said, I do not recommend. Darn it making it rain sounds like a lot of fun, but you're probably going to be taxed 10% because you're taking the money out of your 401k early. And guess what? You're going to have to pay income taxes on that money too, because you took it out of.[00:25:00]

[00:25:01] Amber Fuchs: I think the IRS should offer this as another option. So

[00:25:04] Jason Fuchs: here's my suggestion for your question. Amber, run out, get yourself a nice game of life. Not only, or both, and take that pink and orange and blue and yellow money. And there you go. That's your rain money. Okay.

[00:25:19] Amber Fuchs: Oh, right. It's not the same, but I understand.

[00:25:22] Jason Fuchs: Such a good example for our daughter. All right. Let's wrap this up in conclusion, ladies and gentlemen, bunny Amber, if you've lost your job, if you're changing careers, if you need help rolling over your retirement plan or plans, please reach out to us for help. Matter of fact, head to our website, www that Sage path,

[00:25:44] There's a pretty little calendar link at the top of the. Click it don't be scared. Ladies and gentlemen, click that link pick a day in time that works for you. And we'll talk about it. If not, you can call email me. All of that info is on the description of the [00:26:00] podcast. It's also on our website. Amber, anything you want to add?

[00:26:03] Amber Fuchs: No, I think that's it for now. I liked Bunny's

[00:26:06] Jason Fuchs: question though. I do too. I like bunnies name regulators probably. No way. No, yet.

[00:26:13] Amber Fuchs: I mean, there's gotta be some fun in this industry.

[00:26:17] Jason Fuchs: All right. Well, thank you so much for being here. Thank you for having me. Oh, it's our pleasure. And ladies and gentlemen, all of our listeners.

[00:26:23] Thank you for sticking around. We appreciate all of you. We'll see you in two weeks for another episode of dads sense be well,


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