A very unfortunate consequence associated with the spread of COVID-19 is that unemployment has increased drastically. Many companies are having to shut down or reduce man power. Beyond statistics, this a very personal reality for too many people and their families.
The WARN, Worker Adjustment and Retraining Notification, Act “protects workers, their families, and communities by requiring most employers with 100 or more employees to provide at least 60 calendar days advance written notice of a plant closing and mass layoff affecting 50 or more employees at a single site of employment.”
You may be asking now, how does the WARN Act and financial planning intersect.
There are a number of important steps that should be taken if you’ve been impacted.
Since you are terminated from the employer, you should able to do a direct rollover of your 401(k) into an IRA. With a direct rollover you can preserve the tax deferred status of your retirement without paying current taxes or early withdrawal penalties at the time of transfer.
One of the primary reasons for doing so is that there will probably be more investment choices available. In fact, this is the reason why some retirement plans allow, while you are still employed, transfers into an IRA based upon your age and/or years of serve.
Of course, in all investment decisions, there are pros and cons. This is something we could give you advice on. Contact us or see our website for the steps you should consider taking now.