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Go to targetpayandbenefits.com, everything is there.
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Use the month to figure out where to put it. Either roll it into an IRA or maybe into your new employer 401K. If you just withdraw it you’ll pay taxes on the total amount and an early withdrawal penalty when you file your taxes.
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Target's 401k plan is very good because the money contributed by target immediately vests to you. A lot of companies can cheat you out of the 401k match if it hasn't vested for one, two or even three years. Check with HR for more details on withdrawals.
Something to consider is that if you choose to take out the money rather than keep it in the 401k, the tax bite is much higher than the actual IRS withholding which I think is only 20%. Let's say you had $3,000 in the 401k: yanking the $3,000 becomes income to you, increasing your tax rate. Let's guess that your tax bracket is 20%, that's $600 in taxes you'll pay, but in addition unless you are over age 60 you'll pay a 10% premature withdrawal fine from the IRS, that's another $300. You may end up having to pay in more to the IRS and your state tax people than what target withholds.
The whole point of the 401k is to save for your future. People live longer than they did in the past, social security likely will have much smaller payouts in the future, you probably don't have a pension, if you don't save for your future, who will? Target's plan is low cost, and unless you have small balances under $1000 former employees can't be forced out of a company 401k plan. You could also rollover to an IRA or Roth IRA at a broker, bank or credit union but if you're not comfortable with investing decisions staying in Target's 401k might be the better choice until you're reader to the new company's 401k assuming you like it. Don't shoot yourself in the foot by spending money you need for your future - you don't want to only be able to afford cat food when you're retired.
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That's my cat
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Jazz Paws!
I went to my bank and their financial advisor helped me answer my questions concerning taxes and early withdrawal penalties. They answered all the questions I had. I decided to take it out of Target and roll it into a new retirement fund. No penalties for doing that and no tax implications. I can still access the money at 59 1/2 with no penalties (it would be taxed of course)My pension II left with Target. That continues to grow and will pay until I die. If I took the payout it is a finite amount. They dicontinued the pension program long ago and I was lucky enough to get in that program when it was available. No matter if you are leaving T or not, if you have a 401K you should educate yourself on how to invest your money. I used to basically throw a dart and blindly pick how to choose my options. With the market the way it is, it is more important than ever to invest based on your retirement age and the risk you can safely assume.
I went to my bank and their financial advisor helped me answer my questions concerning taxes and early withdrawal penalties. They answered all the questions I had. I decided to take it out of Target and roll it into a new retirement fund. No penalties for doing that and no tax implications. I can still access the money at 59 1/2 with no penalties (it would be taxed of course)My pension II left with Target. That continues to grow and will pay until I die. If I took the payout it is a finite amount. They dicontinued the pension program long ago and I was lucky enough to get in that program when it was available. No matter if you are leaving T or not, if you have a 401K you should educate yourself on how to invest your money. I used to basically throw a dart and blindly pick how to choose my options. With the market the way it is, it is more important than ever to invest based on your retirement age and the risk you can safely assume.
Burlseveryday
Modern Man to En-joy
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Anything you contribute to an employer sponsored retirement plan is always 100% vested immediately as it's your money. The vesting schedule only pertains to employer contributions.
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That is correct. The problem is the employer contributions part. 401k plans are regulated by the Federal Govt and I don't know why their rules allow companies to have different "vesting" requirements, the 401k plan is supposed to be an employee BENEFIT and companies obtain a huge break on their corporate income taxes by offering 401k plans and matches. IMHO the rules should be more consistent, the average employee who needs to save in a 401k isn't an attorney or investment specialist and having the employer-matches clawed back during a layoff or dismissal due to lack of vesting leaves a very bad taste in the mouth of many people. We are constantly being told (not by Target specifically, but in the news media) that 401ks are better than the old company pension plans.....
Burlseveryday
Modern Man to En-joy
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The department of Labor regulates retirement plans and most of the regulations relevant to this discussion come from the Employee Retirement Income Security Act of 1974 (ERISA). That ultimately has set regulation on vesting rules for employer sponsored retirement programs including 401ks and pensions. The maximum pension vesting schedule is actually longer than its 401k counterpart. As to the reasoning of vesting, I can't speak to it with any degree of certainty but intuitively it makes sense when you consider that: 1, employers will be able to offer significantly higher contributions to longer term employees and 2, shorter term employees have a higher tendency to cash out retirement savings rather than reinvest. Ultimately, the goal of these plans is to prepare workers for retirement. That's why the IRS penalizes early withdrawals. One needn't be an attorney or investment specialist to understand the relatively simple rules of vesting. That's more of a shortcoming of our education system (public and private really) that basic financial competency is considered an elective rather than a necessity.
In regard to the debate between the superiority of defined benefit plans vs defined contribution plans, they, like most things, have their respective pros and cons. These vary based on an individuals income, investment ability, and life circumstances (among other things).
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In summary, Target's 401k is IMHO really good compared to those at many other companies. If you qualify, definitely put up the first 5% into the Roth 401k and then get the matching 5% (into the "non-roth" matching 401k) paid by Target every paycheck. The only drawback here is for hourly store employees who barely can make ends meet, particularly given pay raises which in some cases are less than the cost-of-living (not a real increase in pay), setting aside 5% of pay may be really difficult.
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