^{By Todd Stankiewicz | CIO, SYKON Capital | Portfolio Manager, Free Markets ETF (FMKT)}

Question: I’ve been laid off. Should I cash out my 401(k), and why?

Usually, no. Cashing out a 401(k) after a layoff should generally be a last resort because it may trigger income taxes, a possible 10% early withdrawal penalty if you are under age 59½, and the loss of future tax-deferred growth. That does not mean it is never the right move. There may be situations where someone truly needs access to the money, but the tax cost, penalty risk, and other available sources of cash should be reviewed first. Other options may include leaving the money in the former employer’s plan, rolling it into a new employer’s plan, or completing a direct rollover to an IRA. The right choice depends on your balance, age, tax situation, cash needs, creditor protection concerns, future Roth planning, and the specific rules of your former employer’s plan. If you recently changed jobs or were laid off, reviewing your 401(k) options before making a move can help avoid costly mistakes. Before making a decision, review your plan notices carefully and speak with a qualified financial advisor or tax professional.

About the Author

Todd Stankiewicz | Chief Investment Officer, SYKON Capital

Todd Stankiewicz is the Chief Investment Officer of SYKON Capital, a fee-only registered investment advisor with offices in Westchester County, NY and Jupiter, FL. He is a recurring guest on Fox Business and the Schwab Network, where he discusses markets, portfolio strategy, and investor behavior.

Learn more at www.sykoncapital.com

^{Advisory services are offered through SYKON Capital LLC, a registered investment advisor with the U.S. Securities and Exchange Commission. This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable as of the date of this report. Past performance is not indicative of future returns, and diversification neither assures a profit nor guarantees against loss in a declining market. Investments involve risk and are not guaranteed.}