Products July 22, 2008

Calculator Shows Consequence of Cashing Out 401(k)s

July 22, 2008 (PLANSPONSOR.com) - Workers who are laid off, switching jobs, or struggling financially may want to check out a new online calculator from RolloverSystems Inc. before pulling money out of their 401(k) accounts.
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By entering his or her current age, projected retirement age, expected return, and current plan balance, a 401(k) participant can obtain the amount of penalties and taxes they will pay and what will be left of their distribution from the cash-out calculator. In addition, the calculator informs participants what the savings will be worth at retirement if left to grow in a qualified retirement account.

As an example, RolloverSystems said a 35-year-old plan participant wanting to retire at 65, who has a $5,000 balance and expects an 8% return will find she could pay $500 in penalties and $1,500 in taxes, leaving her with only $3,000 in cash. The calculator would also show that if she rolled over the savings into an IRA, the $5,000 would grow to be worth more than $50,000 at retirement.

The cash-out calculator is available at www.rolloversystems.com .

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