Next Wave Options
Independent life insurance and retirement income agency serving Salinas and Monterey County.
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Independent life insurance and retirement income agency serving Salinas and Monterey County.
Get a quote
"What do I do with my 401(k)?" has the same four answers everywhere: leave it, move it to a new employer's plan, roll it into an IRA, or take the cash. What differs in Salinas is which kind of account you actually have. A produce company, a hospital, a school district, the county and the state prison system offer four different plan types with different rules, and the wrong assumption at the start sends the whole conversation off course. This page sorts the local employers into the right plan types; the mechanics are on our 401(k) rollover options page.
| If you worked for… | You probably have… | Start here |
|---|---|---|
| A grower, shipper, cooler, processor, retailer or logistics company | A 401(k), and possibly several from different employers | 401(k) rollover options |
| Salinas Valley Health or another private hospital | A 401(k) or 403(b) | 403(b) rollover |
| The County of Monterey (including Natividad) or the City of Salinas | A CalPERS pension plus a governmental 457(b) | County 457(b) |
| A school district or Hartnell College | A CalSTRS or CalPERS pension plus a 403(b) | CalSTRS and 403(b) |
| The state, including the correctional facilities down the valley | A CalPERS pension plus a state savings plan | CalPERS |
Two rules that catch people locally. A CalPERS or CalSTRS pension generally cannot be rolled over; it pays monthly under the system's own rules. And money that originated in a governmental 457(b) is generally not subject to the additional 10 percent tax before 59½, which a rollover into an IRA gives up.
Next Wave Options is not affiliated with CalPERS, CalSTRS, the County of Monterey, the City of Salinas or any school district. We explain options and link to the official documents; we never suggest leaving a public plan.
Seasonal and multi-employer work histories leave people with two or three small balances and no paperwork. The order that works: ask each former employer's HR for the summary plan description and the current balance; check for an outstanding loan, because an unpaid loan on separation is usually treated as a distribution; open the receiving account first if you intend to consolidate; and always ask for a direct rollover so nothing is withheld and no 60-day clock starts. Consolidating is one of the four options, not automatically the best one; a plan with good, cheap investment options and federal creditor protection can be worth staying in.
Common here, especially for county and state employees with long service. Two facts matter. Leaving an employer in or after the year you turn 55 lets you take distributions from that employer's plan without the additional 10 percent tax; roll the money to an IRA first and that exception is gone. And 457(b) money keeps its penalty-free access at any age unless it is rolled into an IRA. Neither is a reason to avoid a rollover, but both are reasons to decide deliberately rather than sign the first form you are handed.
A qualified rollover is tax-deferred, not tax-free: nothing is due at the rollover when it is done correctly, and income tax is due when the money is withdrawn. Cashing out is ordinary income in the year taken, with 20 percent withheld from an employer plan and the additional 10 percent tax before 59½ unless an exception applies. Converting to a Roth is deliberately taxable in the year of the conversion. The IRS rollovers page is the source; your own return is a question for a tax professional, and we will say so when you reach it.
You do not have to leave a job to move money, but you usually do have to qualify. Whether a plan allows an in-service distribution, and from which sources, is written in the plan document; many plans allow it once you reach 59½, some allow earlier withdrawals of after-tax or rolled-in money, and some allow none at all. Ask HR for the summary plan description rather than asking a salesperson, because the answer is specific to your plan and no one outside it can promise you an option it does not offer. If the plan does not allow it, the answer is to wait, and nothing anyone sells you changes that.
Only where the income worksheet shows a gap between essential monthly expenses and income guaranteed for life, and only for part of a balance. Every contract we would discuss carries surrender charges for a period of years, limits on annual withdrawals and, for indexed contracts, caps on the interest credited; those come before the benefit in any conversation we have. See annuities. We explain the other three rollover options first, which is the honest order.
See also: Salinas overview, life insurance in Salinas,.
Get the summary plan description and balance for each, check for outstanding loans, and decide account by account. Consolidating into one IRA or a current employer's plan is one option; leaving a good plan alone is another. We put the comparison in writing.
Generally no. The pension pays monthly under CalPERS's rules and is not an account balance. Your 457(b) is separate and does have rollover options, with the early-access advantage described above.
A direct rollover to a traditional IRA is not taxed at the time; it is tax-deferred, and income tax is due on withdrawal. Taking the cash is taxable, with mandatory withholding and, under 59½, an additional 10 percent tax unless an exception applies.
Consider it carefully. Leaving your employer at 55 or later allows penalty-free distributions from that plan; rolling to an IRA removes that exception until 59½. If you need income before then, the sequence matters more than the account.
Yes, entirely: the conversation, the written comparison and the paperwork walkthrough, in person in Salinas or by video.
Ready to talk it through? No cost, no obligation, in English or Spanish.
Schedule a CallReviewed by Roberto Morales, California Insurance License #0G97165. Next Wave Options is licensed for life and annuity products only and does not provide investment, tax or legal advice.
