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Lose Your Employer’s Retirement Plan? Here Are Your Options Now | The Motley Fool

Life doesn’t always go as planned, as sometimes people lose their employer’s retirement plan. Not knowing what to do can be paralyzing. But you can increase your knowledge by watching this video clip from Motley Fool Backstage Pass, recorded on Jan. 6. In it, Fool contributor Charlene Rhinehart explains the various options workers have to save for retirement. And be sure to watch until the end to hear about one option that Charlene says has a “triple tax advantage.”

Charlene Rhinehart: So I see a question, “My employers stopped 401(k) match, and discontinued 401(k). I’m in the process of moving my 401(k) contributions to a rollover IRA. What options/alternative to the 401(k) do I have outside my employer? I opened a Roth IRA last year.”

There are various options. You have your employer-sponsored plans, you have your individual retirement plans such as a Roth IRA or a traditional IRA. When you’re deciding between the Roth and traditional, you are thinking about future tax rates. Am I going to pay less taxes now than I would pay in the future? Do I want to pay my tax bill up front? That’s why people typically choose the Roth IRA because they want to pay their tax bill up front in exchange for tax-free income during retirement. Those are your IRA options.

Now, if you have a business, you have other options. You can have a solo 401(k), simple IRA, SEP IRA. Those are options if you have a business, and they allow you to contribute a bit more than your traditional or Roth IRA. Traditional or Roth IRA is limited to $6,000 a year, if you are under 50. Once you turn 50, then you’re able to add in a $1,000 catch-up contribution to make up for any retirement savings that you didn’t do in the past. The IRS is allowing you to contribute more.

But those are basic options. You’re looking at your employer’s-sponsored plans. If they don’t have 401(k) or any other plan, you will look at your traditional IRA or Roth IRA, and then you’ll look at your other plans if you’re an entrepreneur.

And then don’t forget about HSAs, a health savings account. That’s another way to invest, and some people use those funds to build up their retirement portfolio because of the triple tax advantage. The money you put in is tax-free, the money grows tax-free, and you can withdraw the funds tax-free as long as the money is used to pay for qualified medical expenses. Those are some options for you.


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