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Michigan Hospital Layoffs

In the face of declining operating income, it has been reported that Ascension Health will begin an unspecified number of layoffs at 14 Michigan Hospitals. It is unfortunate to see layoffs at any employer let alone the size of Ascension. The number of people these layoffs could potentially impact is dramatic. It is my hope that I can provide some clarity on some of the more common finance related questions that come up when someone is laid off. Here are three of the most common questions I get when someone is let go from their job.

1. What should I do with my retirement plan?

When you separate from an employer you have several options of what to do with your 401(k) or 403(b). You often can just leave the plan at the previous employer. If the retirement plan has high quality low cost investment options and you feel comfortable leaving it with your former employer this is a perfectly reasonable option. You could roll the plan into an IRA. This option gives you the most flexibility with regards to investment options but requires you to pick the investment or engage the services of a financial advisor. The third option would be to roll the plan into your new employer's retirement plan. This is assuming you have begun working somewhere else and they have an employer-sponsored plan.

2. Can I access the funds in my retirement plan?

Retirement plans such as 401(k)s, 403(b)s, and IRAs have a restriction on accessing funds before age 59.5. Accessing these funds before that age may result in a 10% penalty plus taxes that must be paid. There are several exceptions to this rule one of which is the separated from service rule. This rule states that if you separate from service the year you turn 55 or later you may access funds from that employer's retirement plan. This would be a good reason to leave assets in the plan until age 59.5. If you may need to access those funds between 55 and 59.5 this exception may give you that needed flexibility. This rule is a tricky one to navigate and if you are contemplating taking advantage of it I would encourage you to employ the services of a professional. If you are 59.5 or have met one of the exceptions accessing the funds will likely still result in income taxes.

3. Will I have enough to retire?

A lay off can often be a setback to a retirement plan but it does not have to be a nail in the coffin. In the midst of this setback, it is important to revisit your plan and assess the steps necessary to keep your goals on track. I would encourage you to work with a financial planner on evaluating your goals and helping to answer the many other questions that may arise during this transition. A qualified planner should be able to help put many of your concerns at rest and establish a well-defined plan for keeping your retirement plan on track.

This commentary on this website reflects the personal opinions, viewpoints and analyses of the Financial Strategies Group, Inc employees providing such comments, and should not be regarded as a description of advisory services provided by Financial Strategies Group, Inc or performance returns of any Financial Strategies Group, Inc Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Strategies Group, Inc manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

This article is written by Brice Carter.


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