Unexpected job loss can be traumatic, but there are important steps you can take to regain control. Here are five things you can do when you’ve found out your company is closing its doors.

• Take advantage of your state’s Department of Workforce Development. They can help you update your resume, search out comparable job offers and find educational opportunities. These transitional times can be perfect for expanding your skill set.
• Review your insurance options. Make sure you sit down with a human resources representative, take notes, and understand your COBRA options. It’s important to get started on this immediately because, with COBRA, you have 60 days to accept coverage or lose all rights to the benefits. Once you select COBRA coverage, you may have to pay 100 percent of the total insurance cost, plus a two percent processing fee. Because cheaper options might be available to you, it makes sense to sit down with an independent insurance specialist as well to make sure you’re getting the most coverage for your money.
• Review your 401(k) options. If you want to maintain the tax-deferred benefits of your 401(k) money, you have three choices: leave the money in your old employer’s plan, roll it over into another tax-deferred format like an individual retirement account, or, when you get a new job, transfer it into your new 401(k). IRA rollovers are a good move because they offer more choices and, in most cases, fewer fees than a 401(k).
• If you do decide to roll over your 401(k) into either a Roth or a traditional retirement account, it is extremely important that you roll it over directly. If you take your 401(k) in a lump sum, your employer will withhold 20 percent for income taxes in case you decide to cash out and keep the money. Generally, you have 60 days to move the money to another tax-deferred account. If you don’t meet that deadline, you’ll have to pay that 20 percent, plus any additional amount you owe at tax time. And if you’re under age 55, you’ll also get hit with a 10 percent penalty.
• Don’t forget about the taxes you’ll owe. Severance pay and unemployment compensation are taxable. Payments for any accumulated vacation or sick time are also taxable. Make sure enough taxes are withheld from these payments or make estimated payments. On the flip side, some of the expenses associated with a job loss can be tax deductible if you are searching for a job in your current occupation. These can include employment and outplacement agency fees, resume preparation, and travel expenses for job search and interviews, but they are subject to 2% of your AGI. Keep track of your receipts.

The most important thing to recognize in the event of any sudden and unexpected job loss is that there are plenty of resources available to help you. At Winch Financial, we have been helping people with 401(k) rollovers since 1981. In fact, we have a whole department dedicated to employer sponsored retirement plans. We would be happy to sit down with you and walk you through your options. With an in-house insurance and tax department and nearly 40 years of experience, we are experts in these types of life transitions.

Call us today for a free, one-on-one consultation. We’re here for you through every season of your life.