Annual Rate of Return

Annual rates of return can vary significantly and will depend upon your asset allocation and other variables. Generally, higher target returns carry greater risk.

 
 

Federal Income Tax Rates

Federal regulations regarding taxes can be complex. Please consult your financial planner or tax advisor about your particular circumstances. You also may obtain helpful information by calling the Internal Revenue Service.

 

What to do with my old 401(k)...
Rollover or Cash Out?


When you leave your job, what you decide to do with your retirement plan money makes a big impact down the road. For many people, the decision comes down to two choices: rollover or cash out. If you roll over money to an IRA, your investment has the potential to keep growing. But if you cash it all out, you could lose half of your current balance to taxes and penalties and as a result, miss out on potential gains.1  This calculator will estimate the impact of your options and help you make an informed decision.

Current 401(k) balance: $
     Please enter your
       current 401(k)
       balance.
     Must be greater
       than one.
     Must be greater
       than one.
Current Age:
     Please enter your
       current age.
     Must be older than 15
       years old.
     Must be less than 90
       years old.
Annual Rate of Return:     %      Please enter your
       annual rate of return.
     Annual Rate of Return
       must be less than
       24%.
     Annual Rate of Return
       must be zero
       or greater.
Age of Retirement:
     Please enter your
       retirement age.
      Must be greater than
       current age and less
       than 90.
Federal Income Tax Rate:     %
     Please enter your
       Federal Income Tax
       Rate.
     Must be less than
       50%.
     Must be zero
       or greater.
State Income Tax Rate: %
     Please enter your
       State Income Tax
       Rate.
     Must be less than
       20%.
     Must be zero
       or greater.
View Current Tax Rates

Note: Please reset the calculator after every calculation.
Reset   Calculate

Rolling over your retirement plan money to an IRA usually gives you the largest balance at retirement because the investment continues to be tax-deferred. There is no penalty or current taxes due with these options. With a hypothetical investment of $xx,xxx, a tax rate of xx% and an average annual return of xx%for xxyears, you could expect a balance of $x,xxx.xxwhen you retire at age xx. See below for a comparison of rolling over vs. cashing out your current balance.

Rollover
Cash Out
Roll over your 401(k) into an IRA. Cash out your 401(k)

Benefits

  • Control over your investment choices
  • Consolidation of investments
  • Continued tax-deferred2 growth
  • No mandatory 20% withholding for federal income tax or state withholding
  • No premature withdrawal penalties
  • Option to transfer to a Rollover IRA, Traditional IRA or Roth IRA, subject to eligibility
  • Traditional and Roth IRAs allow you to make future contributions and consolidate other IRAs and retirement plan assets

Benefits

  • Immediate access to your account balance
  • Can help meet short-term expenses
  • No premature distribution penalty if you are 55 and take early retirement at 59 1/2 when you terminate employment

Potential Disadvantages

  • Early withdrawals may be subject to federal penalty tax (age 59½ for IRA distributions and age 55 for qualified retirement plan distributions)

Potential Disadvantages

  • Could lose more than 45% your money to penalties and taxes for early withdrawal3
  • Amount withdrawn is subject to income taxes for the year it is withdrawn
  • Lose tax-deferred2 growth benefit
  • Might move into higher tax bracket
  • Might not have the financial resources needed to cover expenses in retirement
Early withdrawal penalty: $0
Taxes due: $0
After taxes and penalties: $x,xxx.xx
Balance at retirement: $x,xxx.xx
Early withdrawal penalty: $x,xxx.xx
Taxes due: $x,xxx.xx
After taxes and penalties: $x,xxx.xx
Input Values
Current 401(k) balance $x,xxx.xx Your current age xx
Annual rate of return xx% Your age at retirement xx
Federal income tax rate xx% State income tax rate xx%

2Taxes are deferred until withdrawn. A 10% penalty may be imposed for early withdrawal (prior to age 55 for qualified retirement plan distributions and age 59 for IRA distributions).

3Assumes a 35% tax bracket and no exception to withdrawal penalty applies. State income taxes may apply to your distribution. Your tax bracket may be lower.

The above cases are for educational purposes only. Your actual results may vary. Early retirees who meet certain IRS conditions may be eligible for penalty-free withdrawals as young as age 55. Consult a qualified tax advisor to determine your eligibility.

This information is for educational purposes only and not intended to serve as investment or tax advice.