By Craig Brimhall

North American Precis Syndicate

Americans have become increasingly concerned about job security - and with just cause. Unemployment is on the rise, and that means many people will search for additional funds to help them get through a financially uncertain period of time. Some may choose to cash out their retirement accounts early. However, this seemingly easy choice carries a steep price.

For example, if you have $15,000 in your 401(k) and decide to take a lump-sum distribution after you leave your job, you’ll lose the benefits of tax deferral and the potential opportunity for investment gains worth tens of thousands of dollars. Assuming an 8 percent annual return, that same $15,000 could reach nearly $70,000 in just 20 years.

Taking a distribution can mean a 10 percent early-withdrawal penalty as well as federal and state income taxes. If you’re in the 27.5 percent bracket, federal taxes and penalties will add up to a large bite - $5,400 before state taxes.

Consider rolling your 401(k) to an Individual Retirement Account (IRA). It can give you increased investment options and more control. You can invest a number of ways, including stocks, bonds, mutual funds and certificates of deposit. Assets will still grow tax-deferred and you’ll still enjoy the benefits of compounding growth.

When you leave your employer, you have several options for the money in your 401(k), including: take it and spend it; keep it in your former employer’s plan (if you have at least $5,000 in the plan); transfer it to your new employer’s plan; or roll it over into an IRA.

According to a recent report by Cerulli Associates, of Americans who took a lump-sum distribution from a former employer’s retirement plan, more than half chose not to roll the funds into an IRA. Considering the recent rise in corporate layoffs, literally millions of Americans may be squandering their future retirement assets when they get “pink slipped.”

If you’d like to learn more about IRAs and how to handle your retirement fund dollars, consider consulting a professional financial advisor. A qualified financial advisor can help you make the most of your retirement funds, putting together a plan in step with your current and future needs.

To locate an American Express financial advisor near you, call 800-386-2042. Or, for more information logon to www.americanexpress.com.

Craig Brimhall is Vice President, Wealth Strategies, of American Express.