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When the time comes for your retirement,
your IUE-CWA 401(k) Plan has many withdrawal options to serve your
needs! We would be honored to continue to
help you meet your retirement income needs!
For retirement income, you can choose:
- Monthly Cash Payments over 5, 10, 15, or 20
years as you choose
- You decide what's best for you and we calculate your monthly cash
payments while keeping the remaining savings
invested and earning how YOU choose!
OR
- Monthly Cash Payments over Your Lifetime
or Your and your spouse's Lifetime
- We calculated your life expectancy (or that of you and your
spouse) and then determine your monthly cash payments while keeping the
remaining savings invested and earning how YOU choose!
How do you benefit?
- Investment options monitored on a regular basis by the IUE-CWA Pension Plan
Trustees to help ensure they are performing as they promised with a
variety of mutual fund companies and
investment options,
- Your continued ability to make changes to your account any time (WITHOUT
transaction fees),
- Low administrative fees and no-load
investments (compare with your average fees paid to so
called full service brokerage houses, with high sales commission
fees including the load-fees paid on your investment choices!),
- Maintaining your savings in an ERISA
benefit plan - like your IUE-CWA 401(k) Plan -
protects your assets from predatory creditors. Rolling your
savings into an individual retirement account
may protect your assets from bankruptcy but it may not be protected
from other judgments against you!
- and the Superior Service you
have come to expect from the staff working for you through your
union.
Keep these things in mind if you're considering rolling your savings
over to another 401(k) Plan or an IRA with the help of your local bank!
Here is a check list you can take
with you when discussing your rollover options with a
local investment service or bank:
- What investment options will I have with your service? Are
a variety of funds available from different investment companies?
- Request a breakdown of all fees that will impact your account,
both directly and indirectly, including:
- Transaction Fees
- Account Maintenance Fees
- Administrative Fees
- Sales Charges (Load Fees)
- Sales Commissions
- How often will I receive statements / updates on my account?
- When I am ready to make withdrawals from my account, what will
my options be? Will you make automatic monthly payments to me?
Will that cost extra?
- If I would like to make changes to my investment options, what
are the fees for the change? Will I pay new load charges on
the new investment options?
- What arrangements exist between you as a broker/agent and the
mutual fund companies in your stable of options?
All of these questions are important to be answered by the agent you
are working with! They should be able to answer each question.
If not, you may wish to consider other options, like keeping your
savings in the IUE-CWA 401(k) Plan!
Of course, there is the
option of withdrawing your savings in a lump sum
payment, but you should consider the taxes you will pay:
Let’s say that you decide to leave your job and you
want to cash out your 401(k) retirement money. You are 40 years old and
have $20,000 in your account.
What happens to your money?
You have to pay federal income taxes at your marginal rate, which
could be as high as 35%, (most people are in a 25% tax bracket).
Depending on your state (some states do not have income taxes), you may
also have to pay state income taxes at your current rate.
Because you’re cashing out before you turn 59 1/2,
you have to pay a 10% penalty. When you cash out, the 401(k) Plan must
automatically deduct 20% and send it to the IRS as your initial tax. You
will pay the remaining taxes and penalties on your annual taxes due in
April.
So, what do you end up with?
25% fed taxes 10% Penalty = 35% of your balance to the Federal
Government and that doesn’t include other taxes you may have to pay to
your state!
If you leave the money there until you are 62,
without adding another dime to the $20,000 balance, you could really
have a great retirement account! If you earn 7% on that money from the
time you are 40 until 62 your ending balance would be $94,811!!! Plus,
by the time you are 62 you may be in a lower tax bracket, and there is
no 10% penalty!
It’s not just for 401(k)
Plans!
These same penalties and taxes apply when you cash money out of a
regular pension plan also. |