- You will have to pay taxes on the entire distribution and if you are under age 59 ½ you would be subject to an additional 10% penalty.
- Loss of potential growth, which would continue to grow tax deferred until retirement.
- If you wish to deposit your check into a new retirement account, you must deposit the entire amount including taxes withheld, and you have a window of 60 days to do so or any taxes and penalties would apply.
- If you have an immediate need for the funds, you should check with an advisor and/or tax professional as you may qualify for a hardship that would allow for a partial distribution without penalties.
There are varying fees, tax treatment, underlying investment options, and risks associated with each of the above options.
Therefore, it is important to work with a qualified financial planner to help you fully understand the process and make a well-informed decision on what is best for you.