CHARLOTTE, N.C., July 22 NC-RolloverSystem401k
CHARLOTTE, N.C., July 22 /PRNewswire/ -- Workers who might be tempted to
cash out their 401(k) savings to cope with the down economy now can get a
reality check on how their decision will impact their long-term retirement
security thanks to a cash-out calculator being made available by
RolloverSystems Inc. (RSI), an independent provider of rollover services.
The calculator is designed to educate the increasing number of 401(k) plan
participants who are considering cashing out their accounts, most of whom do
not understand that taking a few thousand dollars today can mean having tens
of thousands of dollars less at retirement due to penalties, taxes and the
loss of compound interest.
"Our calculator helps 401(k) plan participants see into the future and
decide whether it's really worth sacrificing retirement readiness for current
cash. At worst, it helps them make their decisions with eyes wide open and, at
best, it causes them to see the wisdom of leaving their retirement savings
intact," said Jim Langenwalter, RolloverSystem's chief sales and marketing
officer.
Here's how the calculator, available at www.rolloversystems.com, works: A
person simply enters his or her current age, projected retirement age,
expected return, and current plan balance. The calculator will quickly inform
the user of the penalties and taxes they will pay and what will be left of
their cash-out. Additionally, it informs them what the savings will be worth
at retirement if left to grow in a qualified account.
For example, a 35-year-old plan participant who wants to retire at 65, has
a $5,000 balance and expects an 8 percent return might pay $500 in penalties
and $1,500 in taxes, leaving her with only $3,000 in cash. By contrast, if she
rolled over the savings into an IRA, the $5,000 would grow to be worth more
than $50,000 at retirement.
The bigger the nest egg, the bigger the long-term hit. A 45-year-old with
$50,000 could pay $5,000 in penalties and $15,000 in taxes if they cashed out,
but would have $233,000 if they left the money to grow in a retirement
account.
Despite the costs of cash outs, they are on the rise, as workers who are
laid off, switching jobs or struggling financially treat their 401(k)s as
stop-gap measures instead of as long-term solutions.
According to one study, as many as 45 percent of people cash out their
401(k) when leaving their companies. In recent months, the number of cash-outs
has increased due to the economy, with some 401(k) providers seeing double-
digit increases in hardship withdrawals. Loans from 401(k) savings are also on
the rise. RolloverSystems is on the front line of this topic, working
everyday to help participants understand their options and to help keep them
invested in their retirement.
"We encourage all of the participants we serve to keep their retirement
savings intact," said Langenwalter. "If they're absolutely set on cashing out
their 401(k), we urge them to take as little of their savings as necessary and
leave the rest invested in their retirement. In 2007, we conducted more than
125,000 transactions totaling more than $2 billion and in most cases we were
able to keep the participant invested in retirement."
RSI manages the rollover process for 401(k) plan sponsors, supporting
participants by providing education on retirement options, access to an
independent array of high-quality rollover options, and assistance with
rollover, transfer or distribution processes through its Retirement Center.
All terminated participants in a plan - regardless of account balance -
receive this high-level of support, a service that is especially valuable to
participants who otherwise would not have access to professional guidance.
Plan sponsors are comforted knowing that participants will have access to
unbiased retirement counselors and not forced into a particular fund family.
By managing the rollover process, plan sponsors benefit immediately by
cutting plan-related costs, which makes the plan efficient for both the plan
sponsor and the participants. They also reduce their ongoing risk to potential
lawsuits by terminated participants using the Supreme Court's recent LaRue
ruling. At the same time, participants, by working with high-value providers
such as RSI, become more retirement-ready by taking control of their own
retirement savings and managing them more effectively.
About RolloverSystems Inc.
Charlotte-based RolloverSystems, Inc. (RSI) is an independent provider of
rollover services. RSI specializes in helping 401(k) plan sponsors provide
retirement education support to participants providing education on retirement
options, access to an independent array of high-quality rollover options, and
assistance with rollover, transfer or distribution processes through its
Retirement Center. All terminated participants in a plan - regardless of
account balance - receive this high-level of support, a service that is
especially valuable to participants who otherwise would not have access to
professional guidance. For more information, visit
www.RolloverSystems.com/solutions .
SOURCE RolloverSystems Inc.
