Changing jobs can impact your pension benefits, and understanding your options helps ensure you don’t lose out on valuable retirement savings. When you leave a job, there are generally three choices for handling your pension plan: leave it in the existing plan, transfer it to a new employer’s plan, or roll it over into an individual retirement account (IRA).
Leaving your pension with the current employer is a common choice if the plan allows it. The funds will remain invested, and you’ll receive benefits upon retirement, though you won’t be able to make additional contributions. However, the plan’s investment performance and future benefit payments depend on the plan’s health and the employer’s financial stability.
Transferring your pension to a new employer’s plan can consolidate your retirement savings, making it easier to manage. This option is available if the new employer offers a compatible pension plan, but it’s essential to understand potential fees or restrictions associated with the transfer.
Rolling over your pension into an IRA provides greater control over investment choices and typically allows you to continue contributing. An IRA also offers tax-deferred growth, helping your retirement savings accumulate without immediate tax implications. However, early withdrawals may incur penalties, so this option is best for those committed to long-term savings.
Review your pension options carefully and consult a financial advisor if needed to ensure your retirement savings continue to grow after changing jobs. Proper handling can make a big difference in your retirement readiness.