Asked by Erin  |  Submitted October 29, 2015

Is it true that if I take my rollover money out of my company pension account that my employer will withhold 20%? Is there a way I can avoid that?

I want to take the money out of the company pension account and put it in an IRA instead.

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  Answers  |  4

October 30, 2015

Like many things in life . . . it depends. If you have an actual defined benefit pension account, you would be looking at moving it to some other pension manager, and incur various fees. If your account is a 401(K) or 403(B) or similar, which is invested in a batch of mutual funds, you should be able to roll over to an IRA with any of the major firms (Fidelity, Vanguard, Schwab, TD Ameritrade, etc.) for little or no cost.

Typically, the 20% witholding is for taxes, and some companies will do this if you "cash out" and take direct control of your funds. This should only happen if the check gets stroked to you and you are under the age of 59-1/2.

Ask your payroll office for the latest statement of the plan (should be updated) and you may find all the answers there.

$commenter.renderDisplayableName() | 01.18.18 @ 22:09


November 03, 2015

Before you move the money, you may want to consider if you can improve upon your investment choices. Your plan may include reduced cost structures and other cost benefits that you may not have in an IRA. While IRA's have certain protections from creditors, a employer-sponsored retirement account may have more. If an investment professional suggests you move the money to their management, be sure to compare investment options, costs, etc. before making a decision.

$commenter.renderDisplayableName() | 01.18.18 @ 22:09


November 04, 2015

Yes, work with your advisor and set up your new account like (IRA) and request rollover to your new account. they can not to keep any portion from your retirement. please talk to an advisor who can help you in this matter.

$commenter.renderDisplayableName() | 01.18.18 @ 22:09


June 29, 2016

Use a trustee to trustee transfer to move your money from your company plan to your personal IRA. They will help you with it. The 20% aspect comes into play when you liquidate retirement funds. When you move from one trustee to another trustee in a transfer, you aren't liquidating the money as you are not receiving the money outright. It is just going from A to B.

$commenter.renderDisplayableName() | 01.18.18 @ 22:09


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