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Products July 22, 2008
Calculator Shows Consequence of Cashing Out 401(k)s
July 22, 2008 (PLANSPONSOR.com) - Workers who are
laid off, switching jobs, or struggling financially may want
to check out a new online calculator from RolloverSystems
Inc. before pulling money out of their 401(k)
accounts.
Reported by Rebecca Moore
By entering his or her current age, projected retirement age, expected return, and current plan balance, a 401(k) participant can obtain the amount of penalties and taxes they will pay and what will be left of their distribution from the cash-out calculator. In addition, the calculator informs participants what the savings will be worth at retirement if left to grow in a qualified retirement account.
As an example, RolloverSystems said a 35-year-old plan participant wanting to retire at 65, who has a $5,000 balance and expects an 8% return will find she could pay $500 in penalties and $1,500 in taxes, leaving her with only $3,000 in cash. The calculator would also show that if she rolled over the savings into an IRA, the $5,000 would grow to be worth more than $50,000 at retirement.
The cash-out calculator is available at www.rolloversystems.com .