What happens if I leave the company?

If you are no longer employed with the company that is sponsoring your Guideline 401(k), you may be eligible to disburse your funds from your Guideline 401(k). However, Guideline gives you the ability to keep your account open as long as you’d like. Read on to learn more about your options and considerations for each option.

Keep funds with Guideline

You can simply leave your funds in your Guideline account. After a 90-day grace period, you’ll be charged a $4 monthly maintenance fee that was previously paid by your employer.

Benefits

• Manage your retirement account with Guideline’s easy to use platform. 
• Access to Guideline’s financial advisers.
• Payments automatically deducted from account balance. 
• Retain more of your savings with low-cost investments and no AUM fees or other hidden fees.
• No commitments. Funds may be rolled over or disbursed at any time.

Things to Consider

• No additional contributions can be made.
• Guideline will deduct a $4 monthly fee from your account balance.
• Excessive Fee Warning: Though Guideline provides the convenience of keeping your account open, this option may not be suitable for participants with low account balances because monthly fees will be deducted directly from your account, thereby permanently reducing your savings. Your monthly Guideline fee may be too expensive if you have less than $20k in your account. For example, $4/mo = $48 annually. If you have $10,000 in your account, that’s 0.48% per year that you’ll be paying if you analogize to asset-based fees, which may be considered excessive compared to average industry fees. When deciding whether to keep your Guideline account open long-term or transferring your funds to another account, you should consider all associated fees. We recommend reviewing Guideline’s fee disclosure here and comparing against the fees charged by other providers to determine whether keeping your Guideline account is the right choice for you.
• You should compare Guideline’s monthly fees against the fees charged by the institution to which you’ll be moving your funds. In many cases, you’ll end up having to pay fewer sales charges, commissions, and asset-based fees if you leave your funds with Guideline.

Roll funds over to your new employer’s 401(k) plan

If you’re switching to another company that also offers a 401(k) plan, you may be eligible to roll your Guideline 401(k) funds into your new plan.

Benefits

• Your retirement funds will all be in one place, for convenient management

Things to Consider 

• Guideline will deduct a $50 disbursement fee from your balance. 
• You’ll likely pay a higher AUM fee and higher mutual fund expense ratios.
• You generally won’t receive help managing your investments or advice on your investments.
• Depending on your new plan’s rules, you may or may not be permitted to roll the funds out again until there’s a qualifying event (termination of employment, death, disability, retirement).

If you decide to roll your funds over to a new 401(k) plan, use the Rollover Distribution form found in your participant resource library. Learn more about rollovers here.

Roll funds over to an IRA

Benefits

• There’s generally no cost to set up an IRA
• More individual control over your investments and distributions

Things to Consider

• Guideline will deduct a $50 disbursement fee from your balance.
• You’ll have to hire a financial advisor for portfolio management or self-manage your portfolio.
• You’ll have limited bankruptcy and creditor protection, as opposed to the full protection you get with a 401(k).
• Having unlimited investment choices and handling your portfolio yourself can be more confusing and stressful than you might think it is.
• Account Minimums: Some IRAs require minimum account balances, and may charge a higher fee for low account balances.
• IRAs frequently charge annual fees, management fees, brokerage fees & commissions.

If you decide to roll your funds over to a new IRA plan, use the Rollover Distribution form found in your participant resource library. Learn more about rollovers here.

Choose a cash disbursement

Benefits

• Your funds become immediately available to you.

Things to Consider

• Guideline will deduct a $50 disbursement fee from your balance.
• You’ll have to pay income tax on the full balance, plus a 10% penalty tax if you’re under age 59 ½.
• Lose the tax-advantaged nature of growing those funds in a retirement account.
• A 20% federal tax withholding will be applied to your account balance

If you do choose to cash out your Guideline 401(k), please contact our Customer Success team.

What about non-vested account balances?

If your employer has been contributing to your plan subject to a vesting schedule, your unvested funds will be forfeited once you leave the company. This means you will only be able to disburse the vested portion of your account. Any unvested employer contributions will remain in the plan and eventually be used for plan expenses or be re-distributed to other employees, depending on the terms of the plan. Learn more about how vesting works here. 

If you’re rehired within five years of your original termination date, your company may restore your previously forfeited nonvested account balance.

However, if you’ve already taken a distribution of your vested account balance, you may have to repay this distribution in order for your non-vested funds to be restored. If you repay the entire amount of the vested distribution, the forfeited amount will be restored to your account. You must, however, repay this distribution within five years of your date of rehire, or before you incur five one-year breaks in service.

There are multiple factors to consider when deciding what to do with your retirement funds when you leave your company for a new position or new life adventure. We’re more than happy to help you make the call. Let us know if you’d like to consult with our CFP to get some extra support as you make your decision. Whether you decide to keep your money with Guideline or move to a new retirement plan, we wish you all the best as you save toward a comfortable retirement.