Retirement Plan Options When Leaving an Employer

Keeping your money working harder for you may be easier than you might think

Browse Options & Pros vs. Cons

Leave the Money in Your Former Employer's Retirement Plan
Roll the Money Over to a Rollover IRA
Roll the Money Over to a New Employer's Retirement Plan
Receive a Lump-Sum Distribution (Cash-out)

This may be an option, depending on your former employer’s retirement plan; check with the plan administrator.

Pros:

Consistency (investment choices may remain the same. You may also consider different investment alternatives within the plan)
Maintain tax-deferral of your investment
No immediate withdrawal penalties^[1]
No immediate income tax obligations^[1]
Ability to move money to a rollover IRA or to a new employer’s retirement plan at a later date

Cons:

Dependent upon former employer permitting money to remain there
May need a minimum $5,000 balance to be eligible
Limited investment options
Limited access to your money
Inability to make additional contributions
Loans are not permitted
Required Minimum Distributions are triggered by your attainment of age 73, up from 72 (the RMD age as of 2019)

Assets can be rolled into an IRA at any financial institution, and can continue to be invested tax-deferred.

Learn more about rollovers at PNC Investments

Pros:

No immediate income tax obligations, no withdrawal penalties with a direct rollover^[1]
Maintain tax-deferral of your investment
Potentially larger selection of investment options, and full control over investment choices
Consolidating retirement assets can make them easier to track
Potential to convert rollover IRA to Roth IRA
Potential to rollover money to a new employer’s retirement plan at a later date (unless money is combined with other IRA assets)

Cons:

IRAs do not permit loans
Required Minimum Distributions are triggered by your attainment of age 73, up from 72 (the RMD age as of 2019, non-Roth IRAs)
Risk of higher costs

IRA Selection Tool

Need help choosing an appropriate IRA for you? Use this tool to find out what kind of IRAs you may be eligible for, and compare the pros and cons of each type.

Compare IRAs

This may be an option, depending on your new employer’s retirement plan; check with the plan administrator.

Pros:

Ability to consolidate retirement assets from more than one plan, and build assets through continued contributions
Maintain tax-deferral of your investment
No immediate withdrawal penalties^[1]
No immediate income tax obligations^[1]
Potential for larger selection of investment options
Potential to take loans (if plan permits)

Cons:

Risk of fewer investment options
Risk of limited access to your money
Required Minimum Distributions are triggered by your attainment of age 73, up from 72 (the RMD age as of 2019) (unless you are still working for the sponsoring employer and your plan allows RMDs to commence at retirement, if later)

Depending on your age and account balance, taxes and penalties may deplete a large component of your savings.

Pros:

Money is available immediately
No early withdrawal penalty IF you’re age 59½ or older

Cons:

Substantial amount of account balance is consumed by income taxes (and penalties, if you’re younger than age 59½)
Risk of not having enough money when you need it in retirement
No more tax-deferral of your investment
Distribution (i.e. additional income) could push you into a higher tax bracket for the year in which the money is withdrawn

Associated Products & Services

The following information may be provided by PNC Investments affiliates, including PNC Bank, PNC Private Bank^SM PNC Institutional Asset Management®

Traditional IRAs

With a Traditional IRA, you can benefit from possible tax-deductible contributions and earnings that accumulate tax-deferred.

Learn More About Traditional IRAs

Roth IRA

If you meet certain income qualifications, you can use a Roth IRA to invest towards your retirement with tax-free earnings, with potential tax-free withdrawals in retirement.

Learn More About Roth IRAs

Capital Directions®

Capital Directions®, a unified managed account program, was designed for clients who prefer to consolidate and manage investments in an efficient, single account structure.

Learn More About Capital Directions

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Withdrawals will be taxed at current rates. Early withdrawals prior to age 59 1/2 may be subject to a 10% penalty tax.

Be sure to consider the impact of fees and expenses in connection with the different options described above and consult with your personal tax advisor before making any decisions.

When making the decision to roll over a 401(k) account to an IRA, please consult your tax or legal advisor regarding any tax or other implications, and consider that investment choices and retirement payment options between the accounts will differ, and other costs and expenses may differ

This material is meant to educate and not to provide legal, tax, accounting or investment advice. PNC Investments and its affiliates and vendors do not provide legal, tax or accounting advice.

"Recommended" articles and additional information may be provided by PNC Investments affiliates, including PNC Bank, PNC Wealth Management and PNC Institutional Asset Management.

Important Investor Information:

Brokerage and insurance products are:

Not FDIC Insured. Not Bank Guaranteed. Not A Deposit. Not Insured By Any Federal Government Agency. May Lose Value

Securities products and brokerage services as well as managed account advisory services are offered by PNC Investments LLC, a registered broker-dealer and a registered investment adviser and Member FINRA and SIPC. Annuities and other insurance products are offered through PNC Insurance Services, LLC, a licensed insurance agency (CA License #0B57695).

PNC Investments and PNC Insurance Services do not provide legal, tax, or accounting advice.

View the PNC Investments Business Resiliency Planning Customer Disclosure.

This document provides information on additional compensation that PNC Investments receives from certain mutual fund companies, 529 plan program managers and insurance companies.

This material does not constitute an offer or solicitation in any jurisdiction where or to any person to whom it would be unauthorized or unlawful to do so.

PNC Investments does not guarantee the performance of any investment. Investing results may vary. Investments may lose money. Diversification and asset allocation may not prevent a loss of investment.

PNC Investments LLC, PNC Insurance Services, LLC and PNC Bank, National Association are each affiliated with The PNC Financial Services Group, Inc.

Bank deposit products and services provided by PNC Bank, National Association. Member FDIC.

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Retirement Plan Options When Leaving an Employer

Keeping your money working harder for you may be easier than you might think

Browse Options & Pros vs. Cons

Pros:

Cons:

Associated Products & Services

Traditional IRAs

Roth IRA

Capital Directions®

Related Resources

Investment Insights from PNC

Retirement Planning Milestones: A Timeline for Achievement

PNC Retirement Calculator

Get Started

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Let's Start a Conversation

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How PNC Investments Does Business

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