One of the most important decisions you have to make when leaving a job is what to do with your retirement plan. You spend many years building up the nest egg that will see you through retirement, but it is just as important to tap those funds in the right manner. If you make the wrong moves, you could end up losing a substantial portion of your money to taxes and penalties.
Gather the latest statements and documentation regarding your IRA, 401k plan and other retirement programs. It is important to know approximately how much money you have to work with.
Contact the administrator of each plan you wish to cash out to discuss your options. If you are over age 59 1/2, you can withdraw money from your 401k or IRA without paying a penalty. If you are under age 59 1/2, you could face a tax penalty if you pull the money out of your retirement fund rather than rolling it over.
Call the 401k or IRA administrator and let them know you wish to cash in your plan and begin receiving payments. Keep in mind that you will owe taxes on a 401k withdrawal or distributions from a traditional IRA. For that reason, it is a good idea to spread the withdrawals out over a period of time, rather than taking all of the money in a lump sum.
Consult with a tax expert or CPA to determine your potential tax liability for the amount you plan to take out of the plan. A CPA or tax expert can guide you and help you determine the best way to tap the funds you have so diligently put aside.
Complete the forms provided by the retirement plan administrator and submit them to the organization using the address on the form. Make copies of the documents for your records.