09-05-2019 Columns

Leaving your job? What happens to your 401(k)?

If you’re in the early stages of your working life – or even in the not-so-early ones – the chances are pretty good that you will change jobs at some point. When that happens, you’ll probably leave a few things behind – but will one of them be your 401(k)? Of course, you wouldn’t really forget about your 401(k). (It does happen, however – over the period from 2004 through 2013, more than 25 million people left at least one 401(k) or similar plan behind when they left their job, according to the U.S. Government Accountability Office.) But you will have to do something with your account. Essentially, you have four choices: You can cash out your 401(k). It’s your money, but if you take it out before you reach 59-1/2, you will owe federal income taxes, plus any applicable state and local taxes. Also, you will likely be charged a 10% penalty for early withdrawal. Perhaps even more important, if you liquidate your 401(k) when you change jobs, you’ll be reducing the amount you’ll have left for retirement. You can leave your 401(k) with your old employer. If your former employer permits it, you can leave your 401(k) intact, even after you move to a different job. This might be appealing to you if you like the investment choices in your account, but you won’t be able to make any new contributions. Plus, you won’t face any immediate tax consequences. You can move the money to your new employer’s 401(k). You can consolidate your old 401(k) with one offered by your new employer, if allowed. You won’t take a tax hit, and you might like your new plan’s investment options. And you may find it easier to manage your funds if they’re all held in one place. You can roll your 401(k) into an IRA. You don’t need the permission from any employer – old or new – to move your old 401(k) to an IRA. Your money will continue to grow on a tax-deferred basis, and an IRA offers you a virtually unlimited array of investment options – stocks, bonds, mutual funds and so on. You can make either a direct or indirect rollover. With a direct rollover, the administrator of your old 401(k) sends your money directly to the financial provider that holds your rollover IRA. No tax is withheld because you never actually take possession of the money. With an indirect rollover, you’re technically withdrawing the money and moving it to the IRA provider yourself. (You’ve got 60 days to make this transfer.) You will face a withholding of 20% of your account’s assets, but you may be able to recover most of this amount when you file your tax return. Still, for the sake of ease of movement and avoidance of all tax issues, a direct rollover may be more advantageous. Which of these options is right for you? There’s no one “right” answer for everyone. You’ll have to consider several factors, and you’ll certainly want to consult your tax professional before making any decision. But in any case, do whatever you can to preserve – and hopefully grow – your 401(k) assets. You’ll need these resources to help fund the retirement lifestyle you want and deserve. This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Passing a budget Southwest Michigan can afford

I hope you all had a safe and enjoyable Labor Day weekend and had the chance to spend the last week of summer with friends and loved ones. Last week, the legislature returned to Lansing after our in-district work period. Despite summer-long negotiations between the House, Senate, and the governor, the governor has refused to budge on her 45-cent gas tax increase and consider funding options from the budget approved by the House in June. She has made little to no effort to understand the effect her tax increase would have on Michiganders. While traveling my district, I have heard how badly a 45-cent gas tax increase would impact our community. Already struggling farmers would have even higher daily expenses just to operate their farms. Everyday people, especially those in rural areas, would have to pay hundreds of dollars more for gas each year and may not be able to afford to get to work. It is our responsibility as elected officials to use the money the government already collects from hard-working taxpayers wisely and not simply throw money at a problem. We need to move forward with a plan that continues to support road repairs while we actually solve the root cause of the problem. Our educators have had to start school for the first time in years without a concrete budget and it’s long past time we give them one to support our students. As a former teacher, I know firsthand how difficult it is to plan for the upcoming year with uncertainty hanging over your head. Let’s get this done, and done right. If you ever have any questions about the budget or state government, I encourage you to contact me via phone toll free at 800-577-6212 or via email at BethGriffin@house.mi.gov.

Grandparents Day: A time to honor and remember

Sunday, Sept. 8 will be a grand time, because it is national Grandparents Day. Grandparents Day has been celebrated throughout our country on the first Sunday after Labor Day for over 30 years and rightly so. Grandparents play such an influential role in our lives, especially by sharing their wisdom, knowledge, talents and perspectives on life. On this Grandparents Day, families throughout Southwest Michigan, our state and our nation are called to join together to celebrate and serve our beloved elders. It is also a time to advocate for seniors to help address issues they may be facing. In the Senate, I am proud to support legislation introduced by a colleague that would strengthen penalties against those who prey on the vulnerable and elderly in our state. Senate Bills 412 and 413 would increase the penalties for embezzlement from a vulnerable adult to up to one year of imprisonment and a $1,000 fine for a first offense, and to as much as 25 years and a $100,000 fine for three or more offenses. Senate Bills 108 and 109 would allow for the one-year imprisonment of anyone convicted of committing assault and battery on a vulnerable adult, and five years for a second or successive offense. Elder abuse and neglect often go underreported or unrecognized. We should work to strengthen Michigan laws to better protect our seniors. Grandparents are role models, our biggest fans, and some of our oldest and best friends. On this Grandparents Day, join me in taking time to honor, remember, appreciate and celebrate our grandparents. For more information, visit www.GrandparentsDay.org.

National Emergency Preparedness Month

Many people are concerned about the possibility of a public health emergency such as a natural disaster, act of terrorism, or disease outbreak. You can take steps now to help you prepare for an emergency and cope if an emergency happens. To help you prepare, here are step-by-step actions you can take beforehand to protect yourself and your loved ones. Step #1: Get a kit! Put together an emergency supply kit so that you will be prepared in case something happens. You should have emergency kits for your home, office, school, and vehicle. The basics are water (one gallon per person, per day), non-perishable food, first aid kit, flashlight, battery powered or hand crank radio, medications, sanitation supplies, cell phone chargers, and important family documents and contact information. Step #2: Make a plan! Planning what to do before a disaster strikes provides the best protection for you and your family. Because you and your family may not be together when a disaster hits, it’s important to create a communication plan to help you and your loved ones connect and get help. Step #3: Be informed! It’s important that you and your family know what to do before, during, and after an emergency. This means understanding what emergencies are likely in our area and specific ways to respond to each one. You should also understand the ways you can get information about potential threats, such as through text alerts, emergency sirens in your community, or other methods. For more information, visit the Berrien County Health Department website www.bchdmi.org or Facebook www.facebook.com/bchdmi.

Congress’ priorities for the rest of 2019

This week, I wanted to look ahead at what Congress will be working on during the rest of the year. I expect a renewed focus on two issues that I have spent much time working on recently: ending gun violence and solving the crisis at the southern border.

Too often we hear the news that another community in America has fallen victim to a mass shooting. The time is now for Congress to pass common sense solutions to help end these senseless tragedies. I have advocated for and sponsored legislation to create a red flag law and close loopholes in background checks – two important steps I believe we need to take to minimize these mass shootings and get guns out of the hands of criminals while protecting second amendment rights for law-abiding citizens.

It is also important that Congress works together to end the crisis at the border and keep the American people safe. Our border and immigration system are completely overwhelmed. And the truth is the border crisis will only get worse if we do nothing. The Problem Solvers Caucus has some good suggestions about how we can better secure our border, and we are committed to working together on finding a long-term solution that makes up for the failures of the past.

To learn more about other important legislative issues, follow me on Twitter at @RepFredUpton or visit my website: upton.house.gov. You can also call my offices in Kalamazoo (269-385-0039), St. Joseph/Benton Harbor (269-982-1986), or Washington, D.C. (202-225-3761).