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New Job? What LGBTQ Women Need to Know About Combining Retirement Plans from Different Employers

Your big day is here. After months of networking and interviewing, you’ve landed an exciting new job, and you’re about to meet your new team. It’s a time of transition, learning and new beginnings. You’re bringing your best self to your new role. Why not include your retirement plan?

With all the excitement, you might not be thinking about combining your retirement plans, and you likely have questions about how to get started. If you’re an LGBTQ woman, combining retirement plans may be more nuanced based on complexities regarding earnings and savings.

It has been well documented that LGBTQ women, like all women, have been traditionally underpaid across industries, according to groups like the Human Rights Campaign and the Movement Advancement Project. And personal situations such as caring for children or elderly family members may have affected your ability to fully participate in the workforce, which in turn may have impacted your retirement savings. As caretakers, women often focus on caring for others and not spending enough time taking care of themselves. So not only do women make less than men — they save less, too. Take this opportunity now to increase your retirement savings.

What Are the Options?
In general, you’ll have two ways to combine your retirement plans and ideally increase your savings when starting a new job:

  1. Your new company may offer a 401(k) or a 403(b) plan that accepts rollovers.
  2. You might choose to roll over your plan into an IRA with a financial services firm of your choice.

If you feel you need more time to decide about rolling over your former employer’s plan, you could wait until you are comfortable in your new role — and then make a change. If you choose this option, consider enrolling in your new company’s retirement plan when you begin your new job to begin saving right away.

Why Combining Plans Now Matters
At some point, you may want to consider combining all or some of your retirement plans from different employers. Here are some reasons to consider:

Reimagine and rebuild your retirement. It’s possible that your former employer’s retirement plan has not been fully meeting your needs — particularly if you were not reviewing your contributions and allocations regularly. Your new job presents an opportunity to reassess your retirement needs based on your situation today. For LGBTQ women, this means taking a close look at your earnings, income gaps and savings.

Take control. There are instances when it might make sense to keep your retirement plan at your old employer. However, you might be missing an opportunity to take control of your retirement by consolidating your accounts. If you have two 401(k) or 403(b) accounts, for example, it can be difficult to stay on top of allocations and contributions, and you might be duplicating efforts unnecessarily. As you determine whether to combine your accounts, a best practice is to contribute the amount that your new employer will match. In addition to combining accounts, you might also want to consider other retirement options for your specific situation (perhaps caretaker responsibilities). For instance, one option to consider might be a guaranteed income annuity that provides income you can count on when you need it.

Explore catch-up provisions. If you haven’t been able to save for retirement as you hoped because you were underpaid compared with your male counterparts or you have had earnings gaps, you might explore IRS catch-up provisions. These provisions may apply to 401(k), 403(b), SARSEP (salary reduction simplified employee pension) and governmental 457(b) plans, and the provisions currently allow people over 50 to save more for retirement by contributing up to $6,500 in 2021 on top of the regular contribution amount (the exact amounts differ by plan type). Additionally, you can make catch-up contributions to your traditional or Roth IRA of up to $1,000 in 2021. Carefully review IRS requirements for catch-up provisions and deadlines at www.irs.gov.

Align values with investing. Combining plans presents an opportunity to align values with investing, which is a priority for many LGBTQ clients. Many 401(k) and 403(b) plans do not have environmental, social and governance (ESG) funds, and the choices may not reflect your values. For example, funds’ underlying investments might have supply-chain issues that contribute to serious and unacceptable social problems, such as discrimination and systemic racism. You have an opportunity now to reimagine how your retirement investments reflect your values. Take the time to look under the hood of your new retirement offerings. If you are not satisfied with your new firm’s 401(k) or 403(b) offering, consider an IRA.

Protect your loved ones. Now is the time to review retirement plan beneficiaries and ensure that you are protecting your loved ones. When you combine plans, make sure that you have named your partner, spouse or loved one as a beneficiary. Here is where nuances occur for LGBTQ women.

  • If you have a former spouse still named as a beneficiary on your previous employer plan, this should be updated.
  • Suppose you are not married, and you leave your retirement account to your partner/significant other. In that case, your beneficiary may have to empty the retirement account in 10 years per the SECURE Act of 2019, and your beneficiary may need to contend with potential tax consequences. This situation becomes complicated quickly, and your partner/significant other might not be prepared for the inheritance and subsequent taxes. The specific tax implications will depend on your partner/significant other’s age and other factors.
  • If you are single, you will want to consider naming loved ones or family members as beneficiaries. You might also want to consider assigning charitable organizations as beneficiaries if giving to charity is important to you.

How to Move Forward

Find a CFP® professional in your community. Now is the time to find a CERTIFIED FINANCIAL PLANNER ™ (CFP®) professional who can guide you through the process of combining retirement accounts and making thoughtful decisions. Importantly, not all financial advisors are created equally. Use the Find a CFP® professional search tool on LetsMakeAPlan.org to find a CFP® professional who will listen to your unique needs and goals. Find an ally or a member of the LGBTQ community with whom you can connect. By exploring your situation together and mapping a path to follow, you'll feel more confident about your retirement planning choices.

Learn about your CFP® professional’s network. CFP® professionals work closely with tax and legal professionals and may have longstanding relationships with these partners. Learning about the scope of your CFP® professional’s network is important for your comfort level regarding your specific situation, such as addressing potential tax considerations when depleting retirement accounts.

Commit to staying involved. Once you find your CFP® professional and begin this important relationship, commit to staying involved and being open to learning. Understand that your CFP® professional will review and stay on top of retirement plans regularly. Your CFP® professional will work to help build and preserve a secure future for you and your loved ones by providing guidance throughout life’s stages. By staying involved, you can be confident that your plan is continually working toward your aspirations.

As you take an exciting next step in your career, be proud of what you’ve accomplished. Seize this moment to take control over your retirement and reach out to a CFP® professional in your community today.


This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

This information is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek advice from an independent tax or legal professional.

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.

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Women Planning for LGBTQ Individuals and Couples