mjmessi,
Thank you for your question. You have several things going on in your financial situation so it is important to tackle them one by one.
I can understand wanting to maintain access to the money during a period of financial instability. The last thing to do is swing for the fences with your investments, see big losses, and then be forced to liquidate. Regardless of what you choose to do with your prior employer retirement plan, it would be beneficial to avoid investment risks until you have a more stable financial position including having an emergency fund. A general rule is having three to six months of fixed living expenses saved for emergencies. This can help avoid disrupting your investments in the future, and help give them time to grow.
If you decide to move your employer retirement plan, please consider the following. There are potentially early distribution choices within a 401k that are alternatively not available with an IRA. If you separate from your employer after the year you turned 55 years old, you may be able to take a distribution from your retirement account without a tax penalty. If you are under 55 this doesn’t apply to you, and unless you qualify for some other exception, you could be looking at a tax penalty for distributions from your account.
While IRA’s do not offer loans, a loan may be possible through an employer provided retirement plan. It may be beneficial to speak with your current benefits provider to learn more about your employer provided plan options even if you don’t plan to spend your career with them.
It sounds like you are seeing more change on the horizon with your employment. With job changes, benefits like health insurance or life insurance carry a lot of weight toward financial security. Having adequate insurance protection can help keep your financial plan afloat and make you more resilient to all of life’s fun little surprises that hit your wallet.
Our goal is to continually enhance the experience and better identify potential ways of improving your financial health. Please take a few minutes, and use the USAA Financial Readiness Score (FRS) tool. The first step is to assess your current situation and then take the necessary steps to improve it. Additionally, USAA’s financial advisors are here to help, give us a call at 1-800-292-USAA and we can help you take any actions that your situation calls for.
I hope this has been helpful, please let me know if you have any further questions
Sean Scaturro CFP®
Advice Director
