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Vanguard - Cash Distribution Cost
Personal Investors

The Cost of Cashing Out of My Employer Plan

PlainTalk® in Brief

If you take a cash distribution to meet financial needs now, you risk not having enough money later, when you retire.
Consider borrowing from another source or taking only what you need so that you can roll over the balance of your assets without penalty.

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If you take your company retirement plan assets in a cash distribution when you leave or retire, you may lose a significant portion of your assets to federal taxes and penalties, as well as to state and local taxes. And, your savings will no longer continue to grow tax-deferred until your retirement.

Use this calculator to see:

  • How much of your company retirement plan assets could be consumed by taxes and penalties if you take a cash distribution.
  • How these assets could continue to grow tax-deferred if you roll over your assets to an individual retirement account (IRA) or another qualified plan.

Cash distribution vs. rollover to an IRA

1. Were you under age 55 when you left your employer?

  Yes No

2. What is your federal income tax filing status?

 

3. When you file your taxes, how much will you declare as taxable income?

$

4. What is your state tax rate?

 

5. How much would you take as a cash distribution?

$

6. In how many years do you expect to retire?

 

7. What average annual total return do you estimate you'd earn from a rollover IRA?

 
   
 

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