401K is a popular retirement savings account in the United States, created to help workers save and invest for their future retirement. Here are 3 cases of use after retirement from the old company if you have not reached retirement age:

1. Withdraw money from 401K before age 59.5:

   • If you decide to withdraw money from your 401K account before reaching age 59.5, you will have to pay a 10% penalty tax on the withdrawn amount. This aims to encourage savers to use 401K for retirement purposes and avoid early withdrawals.

2. Wait until after age 59.5:

   • A common scenario occurs when participants in 401K wait until age 59.5 before starting to withdraw money. However, during this time, the stock market may fluctuate and decline. The depreciation of the 401k account value can affect the value of your retirement account.

3. Transfer money from 401K to another qualified retirement fund:

   • A common option is to transfer money from your 401K account to another retirement fund, such as Annuity, including IRA (Individual Retirement Account). This will be exempt from the 10% penalty tax.

   • Transferring money to another retirement fund can provide you with more investment options and greater control over asset management in your retirement account.

   • Some companies sell Index Annuity type meaning your money will grow with the market and ensure no loss when the market declines. This is considered one of the best policies.

     Retirement funds are an important tool for saving and investing for retirement, but they require patience and investment knowledge. Consult with us regard converting your 401K account!