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Meltdown 101: How Layoffs Affect Retirement Plans

Meltdown 101: How Layoffs Affect Retirement Plans

CANDICE CHOI, AP Personal Finance Writer

Q: Should I take a lump sum or keep it in a retirement account?

A: If you cash out a 401(k) or pension, it’s subject to income taxes and a 10 percent penalty if you’re not yet 59 1/2. So it’s to your advantage to roll the money over into another retirement account, such as an IRA. If you find a new job, some companies let workers roll over money from past retirement accounts into current 401(k) accounts.