Rollover Options

When you leave your job or retire, the decision about where to put the money from your previous employer's retirement plan could make a big impact down the road. To make sure that a rollover is a smart move for you, it is important to understand all your rollover options.

Options Benefits Potential Disadvantages
Roll Over to an American Century Investments® Rollover IRA
  • Control over your investment choices
  • Consolidation of investments
  • No mandatory 20% withholding for federal tax or state withholding
  • No premature withdrawal penalties
  • Can later transfer to a new employer's plan, if the plan allows (except after-tax contribution)
  • 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
  • Withdrawals made before age 59½ may be subject to penalty tax
Roll Over to a New Employer's Retirement Plan
  • Your existing retirement money is consolidated with any contribution to the new plan
  • Continued "tax-deferred" growth
  • No premature withdrawal penalties
  • Can roll over after-tax contributions from your former employer's plan if they allow
  • No 20% withholding for federal income tax or state withholding
  • Investment choices may be limited within new plan
  • May have limited access to your money
Stay in an Old Employer's Retirement Plan
  • Easiest course of action (stay with current investments and no paperwork)
  • Continued "tax-deferred" growth
  • Investment choices may be limited within new plan
  • May have limited access to your money
  • Employer could make changes to the plan, e.g. fund changes, change custodians could close the plan
Cash Out Your Retirement Plan
  • Immediate access to your money
  • Can help meet short-term expenses
  • No premature distribution penalty if you are 55 and take early retirement or 59½ when you terminate employment
  • Could lose more than 45% of your money to penalties and taxes for early withdrawal**
  • Lose tax-deferred* growth benefit
  • Might move into a higher tax bracket
  • Might not have the financial resources needed to cover expenses in retirement

*Taxes are deferred until withdrawn. A 10% penalty may be imposed for early withdrawal (prior to age 55 for qualified retirement plan distributions and age 59½ for IRA distributions).

**Assumes 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.

This information is for educational purposes only and is not intended as a personalized recommendation or fiduciary advice. These are different options available for your retirement plan investments. You should consider all options before making a decision. Our representatives can help you evaluate all of your distribution options.

IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.