How To Withdraw Money Fro Madp

If you have left or are leaving your current employer, you may not be thinking about what to do with your 401(k) Plan assets. We are still here to help keep your retirement dollars working for you.

While it may seem tempting to cash out your retirement plan money for emergencies or short-term expenses, it's important to understand that doing so will cost you right from the start. Federal Income taxes,possible tax penalties and state taxes could leave you with close to half of your available account balance.

The Value of $40,000: Cashing Out vs. Other Distribution Options

This chart compares the potential results of cashing out your money versus rolling it over (into an IRA or a new employer's plan) or keeping it in the Plan. Withdrawing even a small portion of your retirement plan money for an immediate need could make a big difference in the long-term. Federal Income taxes, possible tax penalties and state taxes could leave you with only close to half of your available account balance.

Assumptions: Example using 52-year-old investor planning to retire at 67 and withdraw their entire account balance at that time. 1. Cashing Out with a full distribution: Equals entire amount of $40,000 cashed out, less 37% tax rate (covering Federal, State, and Local taxes) and 10% penalty. Also, if the money is taken in a "cash out," it is spent immediately, and is not invested outside of the plan. 2. Rolling over to an IRA or another employer's retirement plan. Entire amount of $40,000 is invested, 7% annual rate of investment return until entire account is withdrawn at age 67.¹

We can help
Deciding what to do with your 401(k) plan account is important. Talk to an ADP Retirement Counselor² before making a final decision to learn more about all of your options.

Call us at 877-706-1996, to learn more about your options.

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1. This hypothetical situation contains assumptions that are intended for illustrative purposes only and are not representative of the performance of any security. There is no assurance similar results can be achieved, and this information should not be relied upon as a specific recommendation to buy or sell securities.

2. Licensed representatives of ADP Broker-Dealer, Inc., an affiliate of ADP, LLC, One ADP Blvd., Roseland, NJ; Member FINRA.

* Taxes are deferred until a withdrawal is made from a Traditional or Roll Over IRA or another employer's tax qualified plan. A 10% penalty tax may be imposed for early withdrawal (prior to age 55 for qualified retirement plan distributions and age 59½ for IRA distributions). Assumes a 37% tax bracket and no exception to withdrawal penalties applies. State income taxes may apply to your distribution. Your tax bracket may be lower.

Please consult your tax advisor for more detailed information regarding Roth IRAs or for advice regarding your individual situation. Taxes are deferred on a withdrawal from a Roth IRA until withdrawal if certain requirements are met. A 10% penalty tax may be imposed for withdrawal prior to age 59½.

ADP, LLC and its affiliates (ADP) do not offer financial, investment, tax or legal advice to participants, alternate payees or beneficiaries in retirement plans to which they provide recordkeeping and administrative services, and nothing contained in this communication is intended to be, nor should be construed as, advice or a recommendation for your individual situation. Questions about how laws and regulations apply to your specific account and distribution decision should be directed to your plan administrator or legal, tax or financial advisor. ADP is not affiliated with any investment advisors, does not provide investment advice regarding distributions or otherwise act as an investment advisor, nor does it recommend or otherwise provide advice with respect to the engagement any investment advisor.

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