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I’m 53 years old, just got laid off and don’t know what to do now. I have $425,000 saved for retirement, $10,000 in an HSA, and a property that I can sell for an extra $200,000 in cash. Is getting professional help wise?


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Question: I was fired from my job for 12 years. I have a few questions about how to rearrange my future financial plans. I am 53 years old and I plan to return to work after finding a job in the next few months. I am married, but I have separate financial accounts with my husband. I have $350K in a 401(k), $75K in an IRA with another financial institution and an HSA account with $10K. Should I move all of my investment accounts to a single investment account and if so how do I do and will this have any tax implications that I might want to avoid? I also plan to sell my property, which could give me an extra $200k in cash after the sale. Should all assets be consolidated into one investment account or should I invest them in different vehicles?

Answer: We’re sorry to hear about your job loss, but congratulations on the savings you’ve accumulated and the assets you’ve been able to earn. There’s a lot to unpack here, so we’ll tackle each of your questions and work out whether you want to hire an expert to help you. (Are you looking to hire a financial advisor? You can use this tool to be matched with an advisor who can meet your needs.)

Pros and cons of retirement account consolidation

Consolidating retirement funds (like your 401(k) and IRA in one location can make sense — but it’s not always the right course of action. is another matter).

On the bright side of consolidating your retirement funds: “Consolidation makes it easier for you to track your assets, choosing from a variety of funds, ETFs, or individual stocks or bonds, to hold low cost, professional management and access to your money when the time comes,” says certified financial planner Tom Belding of Belding Financial Planning.

Having problems with your financial advisor or looking to hire someone new? Email [email protected].

You may want to merge your 401(k) and traditional IRA — into an existing IRA or into a new account, depending on how your experience with your IRA custodian has been so far — by how to start reinvesting with a custodian IRA, says Future Perfect Planning financial planner Cristina Guglielmetti. (Note that if your IRA is a Roth IRA, you probably won’t want to merge it with your 401(k) for tax purposes, because with a 401(k) you’re contributing money that you haven’t paid yet.) taxes, and with a Roth IRA, your contributions are made after you’ve filed your taxes.)

However, “if you’re looking forward to getting back to work soon, it might be worth the wait to see what the retirement savings plan offered at the new company is like. “If the investment options are good, in the end it makes more sense to put everything into that plan for maximum simplicity,” says Guglielmetti. To do this, you need to contact your new 401(k) provider and start reinvesting with them, then invest the money,” says Guglielmetti.

And if you think you might need to borrow from a 401(k) in the future, you may want to separate your 401(k). (401(k) plans typically provide participants with the ability to borrow from their accounts, although this comes with risks such as penalty payments, higher repayment costs than their initial contribution. friends, reset the repayment meter if you lose your job, etc.)

“As a former employee you won’t be able to borrow from your old plan, but once you find a new job and if you have a 401(k) plan and it allows for reinvestment with loan perks and you want that option in the future, you may want to keep your 401(k) funds separate from other accounts,” said Scott O’Brien, WorthePointe certified financial planner, said. You can also rollover your money from your existing 401(k) to an IRA without penalty, then reverse it into a new 401(k) when you get a new job.

You’ll also want to make sure you reevaluate issues such as investment advisory fees that can be reduced with a consolidated account as well as the quality and cost of investment options used in other accounts. your each other. “Consider your goals for these funds. Will you use them to buy another property or fund other causes in the near future? If so, high-risk investments may not be suitable,” says Daniel.

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Are there tax implications for the consolidation of retirement accounts?

Custodian-to-supervised transfers, transfers directly between financial institutions, will not be subject to any applicable tax consequences. “You should Not Request a check distribution to be made to your name or a 60-day rollover period will begin for you to transfer those funds to a retirement account. If the 60-day period goes by and the check isn’t deposited into a retirement account, you’ll be taxed on any non-Roth funds,” O’Brien said.

What to do with HSAs?

You should separate your HSA from your retirement account, but if your last new employer offered an HSA, you should transfer the old one to the new one. The HSA allows you to make pre-tax contributions without paying income tax, and you can withdraw the money tax-free at any time to pay for medical expenses.

Note that many HSAs have investment options. “Now that you’ve separated from your company, consider transferring your HSA to a provider that charges lower fees or offers other services,” says certified financial planner Matthew Daniel of Columbus Wealth Management. Better investment options.

What to do with the proceeds from the sale of a property

“If you sell a property and want to invest the proceeds, that money will need to be in a brokerage account other than a 401(k), IRA, and HSA. “These accounts can’t be mixed together without unwanted tax consequences,” says Guglielmetti.

While the idea of ​​consolidating your single investment account may sound appealing, it’s unfortunately not a good choice. “Retirement accounts, HSAs and taxable accounts with proceeds from the home need to be in separate accounts. Of course, you can take some of the proceeds from the house and contribute to your IRA or HSA depending on your individual circumstances,” says O’Brien.

Should you hire a financial advisor?

The answers above should get you started on the right track without immediately needing a financial advisor, especially if you’re currently unemployed and trying to save money. That said, if you feel you need financial or investment guidance, an advisor could be the smart choice. The following is 15 Questions you should ask any advisor you might want to hire, and how to Veterinarians so does that person. In your case, an hourly or project-based advisor could be someone with experience in both real estate and retirement planning. (Are you looking to hire a financial advisor? You can use this tool to be matched with an advisor who can meet your needs.)

Having problems with your financial advisor or looking to hire someone new? Email [email protected].

Questions edited for brevity and clarity.

The advice, recommendations or ratings expressed in this article are those of MarketWatch Picks and have not been reviewed or endorsed by our trading partners.

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