Question: What should I do with my old 401(k) and 403(b)?

Answer: This is one of the most frequently-asked questions I answer. Many people have one or more 401(k) or 403(b) accounts with an old employer just sitting, and possibly not invested properly. So, what’s a better way to manage and invest that money? We all have four options.Option 1: Roll over the accounts into a Master IRAPossibly the best way to guarantee the stretch IRA for your spouse, children or grandchildren is to roll all 401(k), 403(b), and company plan funds over to a Master IRA. A designated beneficiary of an IRA can stretch distributions on the inherited IRA over his or her life expectancy. The stretch IRA is the most compelling benefit to the IRA rollover.An IRA can more easily be coordinated with the overall estate plan than the other plans. IRAs offer the option of splitting accounts and naming several primary and contingent beneficiaries.Within an IRA, unlimited investment options are available. You do not have to pick from a small number typically offered by the 401(k) or 403(b) plans. You can easily make changes that better fit your risk tolerance and retirement needs in the IRA.Company plans may have restrictions on withdrawals. In an IRA you have immediate access to funds, regardless of age. Even if you are under age 59?, you can withdraw from your IRA. You’ll pay income tax and the 10 percent penalty, but you still have the ability to withdraw quickly.The Master IRA is a way to consolidate all retirement funds and ease worry about required distributions from both the company plan and your other IRAs.Option 2: Leave the assets in the company planLaws give federal creditor protection to IRAs in bankruptcysituations only, not for other types of judgments.Leave your money in your company plan if you have large plan loans or you may need to borrow from the plan in the future. It may be a better idea to use an equity line of credit on your home, where the interest is a deduction.You cannot buy life insurance in IRAs. Your company plan may be the only life insurance you can qualify for or afford. It may be costly to continue the insurance if you leave the plan.If a plan participant is at least 55 years old when he or she leaves a job and needs some cash, then the money should be left in the company plan and withdrawn from there. Distributions from a company plan will be subject to tax, but no 10 percent penalty.State and local public safety employees can withdraw funds penalty-free if the separation from service was in the year the employee turned age 50 or older.Option 3: Roll the funds to your new employer’s planIf you have been laid off and are seeking new employment, you can roll it over to your new employer’s plan, and delay age 70?-required distributions while you are still working. This does not apply to IRAs.Option 4: Take the funds now as a taxable lump-sum distributionThis may be the WORST decision if you want the money for a “someday” retirement.The bottom line? You choose the option that is best suited to your financial situation and goals.For our free chart showing IRA, 401(k), 403(b) “Retirement Plan Limits,” call 978-777-5000 or email [email protected]. Contact us with IRA, 401(k), 403(b) questions.Thomas T. Riquier, is a Certified Financial Planner? professional and President of The Retirement Financial Center, and has been in business on the North Shore for more than 44 years. Tom offers Securities and Advisory Services through United Planners Financial Services