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KNOW YOUR EMPLOYER RETIREMENT PLAN OPTIONS

Leave It Take ItRoll ItMove It

MKD-4199E-A-PW EXP 31 OCT 2020 © 2018 EDWARD D. JONES & CO., L.P. ALL RIGHTS RESERVED.

LEAVE IT, MOVE IT, ROLL IT, TAKE IT: KNOW YOUR EMPLOYER RETIREMENT PLAN OPTIONS

Program SynopsisLeave It, Move It, Roll It, Take It: Know Your Employer Retirement Plan Options is a 40-minute

educational program that outlines the potential advantages and disadvantages of various retirement

plan distribution options.

Contents

Key Steps to Financial Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Your Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Potential Benefits and Trade-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Leave It with Your Former Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Move It to Your New Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

What Is an IRA? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Roll It to an IRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Stretch IRAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Take a Lump-sum Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Receive Annuity Payments from a Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Develop Your Action Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Answer Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

of 16MKD-4199E-A-PW EXP 31 OCT 2020 © 2018 EDWARD D. JONES & CO., L.P. ALL RIGHTS RESERVED.

KEY STEPS TO FINANCIAL SUCCESS

As unique as your goals may be, we believe the fi ve Key Steps to

Financial Success provide a clear and balanced path to reaching them.

1WHERE

AM I TODAY?

2WHERE

WOULD I LIKE TO BE?

3CANI GET

THERE?

4HOW DO

I GET THERE?

5HOW CAN I STAY ON TRACK?

MY FINANCIAL

NEEDS

®


NOTES

When you retire, change jobs or leave your job, you need

to decide what to do with the money you have saved in your

employer-sponsored retirement plan. A good understanding

of your options is a great place to start.

Options for your employer-sponsored retirement plan:• Leave assets in your employer-sponsored retirement plan

• Move assets to another plan

• Roll assets to an Individual Retirement Account (IRA)

• Take a lump-sum distribution

Once you have a basic understanding of your options, you can work

with your financial advisor to choose the one that makes the most

sense for your situation.

YOUR OPTIONS

What does retirement look like to you? Will you volunteer, work part time, start a second career or indulge your hobby? Whatever you decide, you need to be finan-cially prepared. Saving through your employer-sponsored retirement plan and in other tax-advantaged accounts is an important part of that financial preparation.


Leave It Take ItRoll ItMove It

POTENTIAL BENEFITS AND TRADE-OFFS

Trade-off s tend to center around: Investment options . What and how many invest-

ment choices do you have in your former or new

employer’s plan, or in other account options such

as an IRA?

Education and guidance . Will you have access to a

fi nancial advisor who can meet with you to discuss

your retirement goals?

Fees and expenses . Consider the potential ac-

count fees, investment-related expenses and other

administrative fees you may pay, and the impact

they may have on your long-term goals.

Taxes and penalties . In general, a 10% early

withdrawal penalty and income taxes apply if you

take money prior to age 59½, unless certain

conditions are met.

Withdrawal options and required minimum

distributions (RMDs) How much access to your

assets will you have, and will RMDs be required?

Other considerations . Do you have large holdings

of employer stock, and is your retirement plan

protected from creditors?

Edward Jones, its employees and fi nancial advisors cannot provide tax or legal advice. You should consult your attorney or qualifi ed tax advisor regarding your situation.

NOTES


Leave It LEAVE IT WITH YOUR FORMER EMPLOYER

Potential Benefi ts Potential Trade-off s

• You can avoid current taxes and penal-ties when you leave your retirement assets in your former employer’s plan.

• Leaving your assets with your former employer’s plan may result in lower fees and expenses relative to those of an IRA.

• If you leave your employer in the calendar year you turn 55 or later, you typically can take money from your former employer’s plan and avoid the 10% early withdrawal penalty you would otherwise encounter.

• Your assets may off er a diff erent level of creditor protection under the law than those held in an IRA. Your attorney and your tax professional can provide more insight on this regarding your particular situation.

• You may retain your ability to use the net unrealized appreciation (NUA) for employer stock. Because these rules are complex and your situation is unique, we recommend talking with your tax professional prior to making any decisions.

• You generally have less individual control relative to that of an IRA.

• The number and type of investment options in an employer plan may also be more limited compared to those available in an IRA.

• You may not have access to a fi nancial advisor who can meet with you to discuss your situation.

• If you pass away before taking all your plan assets, your benefi ciaries may not be able to “stretch out” the distributions or roll them to an inherited IRA.

• You may have to track multiple retire-ment accounts.


Move It MOVE IT TO YOUR NEW EMPLOYER

If you are changing jobs and your new employer off ers a tax-deferred retirement plan, you can

move pretax contributions and earnings from your existing plan to the new employer’s plan if

the new plan allows for this.

Circle True or False.

True False If you roll assets from one tax-deferred plan to another,

you avoid current taxes and penalties.


• You can avoid current taxes and penal-ties when you move your retirement assets to your new employer’s plan.

• Moving it to your new employer’s plan may result in lower fees and expenses relative to those of an IRA.

• If you leave your employer in the calendar year you turn 55 or later, you typically can take money from your new employer’s plan and avoid the 10% early withdrawal penalty you would otherwise encounter.

• Assets held in employer plans may off er a diff erent level of creditor protection under the law than those held in an IRA. Your attorney and your tax professional can provide more insight on this regard-ing your particular situation.

• Consolidating your holdings in the former employer’s plan with your new employer’s plan may make it easier for you to manage your assets and deter-mine if you are on track toward meeting your retirement goals.

• If you plan to work past age 70½, you generally do not have to take RMDs from your current employer’s plan until you leave your employer.

• You generally have less individual control relative to an IRA.

• The number and type of investment options in an employer plan may also be more limited compared to those available in an IRA.

• You may not have access to a fi nancial advisor who can meet with you to discuss your situation.

• If you pass away before taking all your plan assets, your benefi ciaries may not be able to “stretch out” the distributions or roll them to an inherited IRA.

• If you move employer stock/securities from your former employer’s plan, you won’t be able to use the NUA strategy for these assets. Because these rules are complex and your situation is unique, we recommend talking with your tax profes-sional prior to making any decisions.


WHAT IS AN IRA?

An IRA is a tax-advantaged account that allows

you to set aside money for retirement. There are

two types of IRAs: traditional and Roth.

Traditional IRA Roth IRA

Tax-deferred growth potential Tax-free growth potential

Contributions potentially tax-deductible Contributions not tax-deductible

Taxed upon distribution Potentially no tax on distributions

Required minimum

distributions at age 70½No required minimum distributions

Cannot contribute after age 70½Can contribute at any age as long

as you have earned income

10% penalty if you withdraw money

before age 59½ unless you qualify for

an exception

Can withdraw principal contributions at

any time without penalty*

* Earnings distributed from a Roth IRA may be subject to taxes and a 10% penalty if the account is less than five years old and the owner is under age 59½.


Roll It ROLL IT TO AN IRA


• You can avoid current taxes and penalties

when you roll your retirement assets to

an IRA.

• You generally have greater individual

control relative to an employer plan.

• You typically have a greater number of

investment choices, including individual

stocks and bonds, as well as a broader

selection of mutual funds.

• You may be able to work with a fi nancial

advisor who can meet with you to discuss

your situation.

• Consolidating your holdings from the

former employer’s plan with your IRA may

make it easier for you to manage your

assets and determine if you are on track

for meeting your retirement goals.

• Your benefi ciaries may generally “stretch

out” distributions.

• There may be higher fees and expenses

than those of your employer plan.

• There may be more restrictions on

when you can start or must begin

taking withdrawals.

• If you roll employer stock/securities

from your former employer’s plan to an

IRA, you won’t be able to use the NUA

strategy for these assets. Because these

rules are complex and your situation is

unique, we recommend talking with

your tax professional prior to making

any decisions.

• Assets held in employer plans may off er

a diff erent level of creditor protection

under the law than those held in an IRA.

Your attorney and your tax professional

can provide more insight on this regard-

ing your particular situation.


Roll It ROLL IT TO AN IRA

NOTES

There are two types of rollovers: direct rollovers and indirect rollovers. Basically, it depends on to whom

the check is made out.

Circle the correct answer in each column under Direct Rollover and Indirect Rollover

Direct Rollover Indirect Rollover

Check Made Payable to:

IRA Trustee You IRA Trustee You

20% Withholding Yes No Maybe Yes No Maybe

Taxes Due Yes No Maybe Yes No Maybe

Penalties Yes No Maybe Yes No Maybe


If you are weighing whether to leave your money in your employer-

sponsored retirement plan or roll it to an IRA, you may want to see

if your plan allows your beneficiaries to stretch their payments.

Basically, stretching payments allows your beneficiaries to continue

to benefit from the potential for tax-deferred growth even after

your death.

Here’s how it works:

$0

$200,000

$400,000

$600,000

Original Owner

Primary Beneficiary

FinalBeneficiary

YEAR 1Individual (age 65) rolls $200,000 into IRA and names spouse as beneficiary

YEAR 10Individual passes away and spouse (age 70) begins receiving minimum distributions from the IRA based on single life expectancy

YEAR 20Spouse passes away and son (age 55) begins receiving minimum distributions from the IRA based on his single life expectancy

YEAR 44The IRA exhausts

its assets, and a total of $1,627,172

has been distributed from the stretch IRA over the life

of the account

Source: Edward Jones. Rate of return is calculated on an annual basis and is for illustra-tive purposes only; it does not represent any currently available investments. These calculations are based on a hypothetical 8% rate of return. Chart reflects only minimum distributions being taken; larger distributions would affect the length of the stretch.

• Let’s say when you turn 65, you roll $200,000 into an IRA and

name your spouse as beneficiary

• Ten years later, you pass away, and your spouse begins receiving

distributions from the IRA.

• Twenty years later, your spouse passes away, and your son, now

55, begins receiving distributions from the IRA.

• After 44 years, the IRA exhausts its assets, and a total of $1,627,172 has

been distributed from the stretch IRA over the life of the account.

The beneficiary payout options can vary depending on the type of

IRA you have (traditional or Roth) and your beneficiary (spouse,

nonspouse trust, charity, etc.). It’s important to review all the

options and your beneficiary designations to determine what is

best for your situation.

STRETCH IRAS

Be sure to review your beneficiary designations regularly, particu-larly when life circumstances change, such as marriage, divorce, the birth or adoption of a child, or the death of a spouse. Up-to-date beneficiaries ensure your money goes to those you intend.


Take ItTAKE A LUMP-SUM DISTRIBUTION

If you opt to take a lump-sum distribution, you receive the entire

balance from your employer-sponsored retirement plan.

This option may seem appealing because you would have the

money available to pay bills or buy something you’ve always

wanted. Keep in mind, however, that this money is for your

retirement. With today’s longer life spans and medical advances,

many can expect to live 20 or 30 years in retirement. You want

to make sure the retirement savings you’ve worked so hard to

accumulate will last.

Taxes and penalties are also a consideration . • Your employer may be required to withhold 20% for federal

income taxes.

• You must pay ordinary income taxes on the distribution in the year

you receive it.

• If you are under age 59½, you may have to pay a 10% penalty

unless you qualify for an exception.

Consider the impact of these taxes and penalties on the amount you

ultimately receive if you have $100,000 in your plan.

59½ or older $100,000

- $28,000 (28% tax bracket*)

$72,000

Younger than 59½ $100,000

- $10,000 (10% penalty)

- $28,000 (28% tax bracket*)

$62,000

*Ordinary income tax

Being informed about your distribution options can help you avoid unnecessary taxes and penalties on your retirement savings.


If you have a pension, you may have the option of receiving a lump

sum or a monthly pension, which may also be called an annuity.

A monthly pension can provide a lifetime of predictable income for

you and possibly your spouse.

If you choose the monthly pension, it’s important to keep the following in mind:• Most monthly pensions don’t adjust for inflation. If you live 20 or

30 years in retirement, that can be a long time to go without a

pay increase.

• If you choose the joint option for your monthly pension, your

spouse will continue to receive payments after your death, but

the checks are usually lower.

• Most pensions do not provide benefits to heirs.

Inflation doesn’t retire. Historically, the inflation rate has been about 3%. If you spend 25 to 30 years in retirement, your expenses could double during that time.

RECEIVE ANNUITY PAYMENTS FROM A PENSION

NOTES


Review your optionsUse the tables in the preceding pages outlining the potential benefits and trade-offs to help you weigh

your options.

Talk to your plan administratorCan you leave your assets in your current plan? If so, be sure to review your fees and expenses,

which may be different now that you’re no longer employed there. Also, what are the options for

your beneficiaries?

If you are considering moving your assets to a new employer-sponsored retirement plan, confirm

that the plan accepts rollovers. Also, you should review your investment options, fees and expenses,

and the options for your beneficiaries with the new plan.

Schedule an appointment with a financial advisor.

Review retirement savings in your employer-sponsored retirement plan and elsewhere to determine

if you are saving enough for the income you’ll need in retirement. Think through the five steps:

Step 1: Where am I today? Make a list of your assets and debts.

Step 2: Where would I like to be? Determine your income needs in retirement.

Step 3: Can I get there?Work with your financial advisor to evaluate whether you can meet your retirement income needs based

on the time horizon and the investments you’re comfortable with.

Step 4: How do I get there? Implement your investment strategy based on your goals and the level of risk you are comfortable with.

Step 5: How can I stay on track? Review your situation regularly to help ensure you are still on track.

DEVELOP YOUR ACTION PLAN


ANSWER KEY

Page 7 – Move It to Your New Employer Circle True or False.

True False If you roll assets from one tax-deferred plan to another, you avoid

current taxes and penalties.

Page 10 - Roll It to an IRACircle the correct answer in each column under Direct Rollover and Indirect Rollover.

Direct Rollover Indirect Rollover

Check Made Payable to:

IRA Trustee You IRA Trustee You

20% Withholding Yes No Maybe Yes No Maybe

Taxes Due Yes No Maybe Yes No Maybe

Penalties Yes No Maybe Yes No Maybe


GLOSSARY

After-tax contribution – A contribution to a

tax-deferred or tax-free account after federal

and/or state taxes have been deducted.

Beneficiary – A person or organization

designated to receive money from a retirement

account, will, trust, insurance policy, etc., upon

the owner’s death.

Lump-sum distribution – A single payout

of money rather than a series of payments

over time.

Ordinary income tax – Tax paid on income from

employment (wages, tips, bonuses, etc.), interest

and dividends. The percentage of tax paid

depends on the tax bracket of the taxpayer.

Pretax contribution – A contribution to a tax-

deferred account before federal and/or state

taxes have been deducted.

Rollover – The transfer of funds from one

retirement account or IRA to another retirement

account or IRA.

Roth IRA – An IRA that is funded with after-tax

contributions and provides tax-free earnings

growth, provided you don’t start taking withdraw-

als until you are 59½ and have held your account

for at least five years. A Roth IRA, like a traditional

IRA, can be funded with virtually any type of

investment. Your Roth IRA contributions must be

made from earned income.

Tax deferral – The ability to delay paying taxes

on earnings until you begin taking withdrawals,

typically during retirement.

Traditional IRA – A retirement account that is

often funded with pretax dollars. Your earnings

grow on a tax-deferred basis. As is true with a

Roth IRA, a traditional IRA can be funded with

virtually any type of investment. Your contribu-

tions to a traditional IRA must be made from

earned income.


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