Individual investors

Changing jobs Whether you're been laid off or you're moving to a better opportunity, or even scaling back on work, career changes are a big event. Before you fully focus on your future, however, don't forget an important financial decision — how to handle the money you've accumulated in your current employer's retirement account. The decisions you make about this retirement money could affect your future financial security. Things to consider: Understanding your options Ask your employer about your existing retirement plan. Your options will vary depending on the type of plan and your length of employment. Generally, you'll have three basic choices for 401(k) plans or other similar plans — reinvesting, transferring, or cashing out. If you've been laid off, you may have an additional choice — maintaining assets in your employer's plan. You'll probably want to carefully explore your options and consult with a professional before making any decisions. And, you'll want to avoid triggering unnecessary tax liabilities. Maintain assets at your employer If you've been laid off, talk to your employer to determine if you may be able to leave your savings in your existing plan. Your assets remain in a qualified tax-deferred or tax-free account. You won't be able to make subsequent contributions but you'll still have control over how your money is allocated among the plan's investment options. Reinvesting You can keep your retirement savings on track by reinvesting the money in another tax-deferred retirement savings program such as a rollover IRA. If you roll your money over correctly, you'll avoid taxes and penalties. First, don't procrastinate. You must roll over your money within 60 days of the date your distribution was issued. If you wait, the money will be considered ordinary income, and you'll owe taxes and possibly a penalty. You'll also want the distribution check made out to the new plan administrator or IRA trustee. If the check is made out to you, 20% must be automatically withheld for federal income taxes. A Roth IRA is another option. Roth IRAs accept only after-tax contributions, so you'll create a taxable transaction if you roll your retirement money into one of these accounts. However, the money will grow tax deferred and, if you've had the account for at least five years, all withdrawals after age 59½ are tax-free. Transferring You'll need to check with your new employer to see if your new plan offers a transfer option. If it does, you can open a conduit IRA, which is a temporary account in which your money can be invested until you can transfer it into your new plan. Cashing out Just taking the cash and spending it is a costly choice with a potentially significant long-term impact on your financial future. If you cash out, you'll owe federal taxes at your ordinary income rate and a 10% penalty if you are under age 59½. Depending on where you live, you may also owe state and local taxes. This means you could lose nearly half of the money in your account to taxes and penalties. You'll also forfeit the long-term benefits associated with tax-deferred compounding. If left to grow over a long period, even a few thousand dollars can grow to a sizeable amount. A $10,000 investment, for example, could grow to more than $55,000 at a 6% return over a 30-year period. * Think carefully before you decide to cash out your retirement account. Your future financial security may depend on that money. Watching your pre- and after-tax money mix If your current employer's plan allowed you to make both pre- and after-tax contributions, you'll need to track these funds separately and check with a professional about the details for rolling over these funds. You won't want to pay taxes twice on the same money. * This hypothetical example is for illustration only and is not intended to reflect the return of any actual investment. Investments do not typically grow at an even rate of return and may experience negative growth. Request a referral to a financial advisor who can help. Fund objectives, risks, charges and expenses should be carefully considered before investing. For a prospectus containing this and other important information call Russell at 1-866-676-7680 or go to the prospectus and reports page to download one. Please read the prospectus carefully before investing. Copyright © Russell Investments 2011. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an "as is" basis without warranty. Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company. Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional. Securities products and services offered through Russell Financial Services, Inc., member FINRA, part of Russell Investments. For information on the Financial Industry Regulatory Authority, go to www.finra.org. RFS-2659. First used: December 2009.			Value of an advisor Benefits of working with a financial advisor Request a list of advisors in your area Printer friendly version of this page

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