Are you in the process of starting a new job?  If you have a retirement plan through your previous employer, you will have to decide what to do with that money.

Here are three tax-related issues that you should consider as you transition:

OPTION 1: CASH OUT

This is called a “distribution’.  Just remember you’ll have to include this in your income on your federal (and possibly state) income tax return, which means it will be taxed.

*If you are under the age 59½, you will owe an additional 10% early withdrawal penalty unless you meet one of a number of limited exceptions.

OPTION 2: ROLL OVER

You may be able to roll your money over into your new employer’s plan, assuming it accepts such rollovers. Another possibility is to roll your money over into an individual retirement account (IRA).

OPTION 3: DON’T MAKE CHANGES

You may not be required to cash out your retirement plan assets. Your former employer’s plan may allow you to leave your retirement savings in that plan for a certain amount of time or depending on how much is in your account.