1 Avoid current income taxes and potential penalties
By keeping your money in your plan, you may also be able to keep it growing on a tax-deferred basis. On the other hand, if you take cash out of your plan, you'll owe income taxes on it—and you may also pay a 10% early withdrawal tax penalty unless you're at least age 59½ or meet other certain requirements. It's important to note here that if you do keep your money in your union-sponsored plan, you won’t be able to add money to it.
2 Low fees and sales charges
Your plan is run by a board of trustees, which has both union and employer representatives. The board of trustees are all fiduciaries on the plan, which means that as they perform their duties, they’re obligated by law to make decisions that are in the union members’ best interest. As part of their role, the trustees work hard to negotiate low investment management and account fees on behalf of members. In addition, investment options within union plans tend to be “no load funds,” meaning you don’t pay a sales charge when you buy or sell shares.1
3 Independent oversight
In many cases, unions hire an independent financial professional to help select and monitor the funds available in the plan. And it's part of your plan fee, so you likely don’t pay extra for it.
4 Automatic rebalancing for your investments
Market conditions may change your investment mix from the one you originally chose, increasing the portion of your money you hold in some funds, while decreasing it in others. Some union plans will allow you to have your account rebalanced automatically every 3, 6, or 12 months at no additional charge—helping to keep your investments in line with your long-term strategy.
5 Flexible withdrawal options
When you’re entering retirement, your union plan may offer you a few ways to take out your money. These include a lump-sum withdrawal, partial distributions, or installment payments. Consider these options as you plan how you’ll take out your money to fund your retirement.
6 Anytime access
Even after you’ve left your union, staying in your retirement plan means you’ll keep the same website and mobile app access and features you’ve been used to.
7 Asset protection
Generally, the money in a former union’s, new union’s, or new employer’s plan is protected from most creditors, while cash you hold in an IRA may not be.2
8 Keep your investment options
Chances are, you’ll continue to have access to all or most of the funds in your current plan after you’ve left the union. So, if they’re working for you, you’re able to keep them.
9 And keep all your current support and services
If you’ve been taking advantage of any of the tools, phone consultations, or any of the other resources that come with your union plan, you get to go on using them.
10 Buy yourself some time to relax and think through your next step
By choosing to stay in your current union plan, you can also stay in the driver’s seat. Maybe you’ll eventually decide to move your savings to another union’s plan, an employer’s plan, or an IRA.3 Perhaps you’ll keep your current account as part of your long-term retirement strategy. No rush, you’ll have time to make a thoughtful choice.
Make sure your union plan savings continue to work hard for you
Some unions make education, planning tools, and one-to-one guidance available to members who are leaving and need help deciding what to do with their retirement savings. And if you already work with financial professionals, they can also help you understand your options and select one that makes sense for you.
So, if you have any questions, don’t be shy about using the resources available to you. You worked hard for the money in your union retirement plan—and it’s important to make good decisions about it.
1 If your funds are no load, they may charge management fees. See the prospectuses for details. 2 State and local governmental agencies allow for the protection of qualified plan assets from most creditors, with the exceptions of spouses and the Internal Revenue Service (IRS). Asset protection only applies to bankruptcy. Funds are subject to market risk and loss of principal. 3 There are advantages and disadvantages to all rollover options. You are encouraged to review your options to determine if staying in a retirement plan, rolling over to an IRA, or another option is best for you.
The content of this publication is for general information only and is believed to be accurate and reliable as of the posting date, but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made.
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