The closure of the Salem Yokohama plant marks the end of an era for many families in the region. If you are one of the hundreds of employees affected by this closing, you might find yourself confused about what to do with the retirement funds you worked hard to accumulate. We at Vested Partners understand what an uncertain time this is for so many families, and we sympathize with the families going through it. We want to shed some light on your options so you can make an informed decision about your next financial steps.
If you participated in the company’s 401(k) or other retirement plan while working at the plant, the money you contributed, as well as any vested employer contributions, remains yours. What you do with that money is up to you, and you have several options:
Option 1: Leave the Money in the Existing Plan
While the Salem plant is closing, Yokohama maintains other locations across the world. This likely means that your 401(k) or other retirement plan will remain open even after you leave the company, allowing you to leave your money where it is. While this might be the easiest option, it limits the investment choices available to you and can make it harder to keep track of your retirement funds.
Option 2: Roll the Funds Into a New Employer Plan
If you start a new job and that employer offers a retirement plan such as a 401(k), you may be able to transfer your balance into the new plan. This allows you to keep your retirement savings in one place and continue contributing through payroll deductions.
Option 3: Roll the Funds Into an Individual Retirement Account (IRA)
Another common option is to roll the funds into an IRA. This is a retirement account with the same general tax treatment and withdrawal rules as your previous plan, but completely owned and managed by you. An IRA can offer a wider range of investment choices, as you aren’t tied to the investment options provided by any one company.
Avoid Cashing Out If You Can
While it is possible to withdraw the money from a retirement plan, doing so triggers taxes and potential penalties depending on your age. For most workers, preserving those savings for the future by keeping them in some kind of retirement account is the better decision.
Take the Time to Review Your Options
We know you’ve got a lot on your mind right now. There are so many decisions that a life change like this requires, and your retirement savings are just one piece of that picture. A rollover or transfer does not have to be complicated, and it’s exactly what we do every day at Vested Partners. If you worked at Yokohama and have questions about your retirement plan, David Ellis, CFP®, can help give you some clarity and make a plan that you feel good about.
You can visit our website by clicking here, or call our office at (540)384-4275 to schedule an appointment with David.
