San Diego Gas & Electric? Is a Rollover into an IRA Right for You?

Choosing an IRA rollover means that your money remains tax-advantaged and capable of growth, as in a San Diego Gas & Electric-sponsored plan. You may also gain more investment options than what may have been available in your San Diego Gas & Electric-sponsored plan. You may also gain oversight of managing these important retirement assets from your trusted Advisor.

If you roll your retirement plan assets over into an IRA account that you already own through your Advisor, you also receive the benefit of combined statements and holistic investment planning, making it easier to track your overall financial situation.

'Receive the benefit of combined statements and holistic investment planning, making it easier to track your overall financial situation.'

brown rocky mountain beside blue sea during daytime

Some of the benefits of rolling your money into an IRA include:

Tax-deferred growth potential: This generally avoids current income tax and distribution penalties when removed from a San Diego Gas & Electric-sponsored retirement plan.

More investment choices: This allows for additional contributions, if eligible. IRAs can be combined and handled by one provider, thereby reducing trustee costs and consolidating statements. Protection from creditors in federal bankruptcy proceedings. The combined amount of your required minimum distributions (RMDs) can be taken from any of your Traditional, SEP or SIMPLE IRAs.

However, there are also some important considerations that San Diego Gas & Electric should make before rolling over their money into an IRA, these include:

Internal management fees might be higher than in a San Diego Gas & Electric-sponsored retirement plan.
Fees and expenses depend largely on the investments you choose.
Loans from an IRA are not allowed.
Early distributions may be subject to a 10% IRS tax penalty in addition to income tax.
RMDs begin April 1 following the year you reach 70½ and annually thereafter; leaving the money in the former Fortune-500 plan may allow RMDs to be delayed until separation from service.
IRAs are subject to state laws governing malpractice, divorce, creditors (outside of bankruptcy), and other lawsuits; leaving the money in the former San Diego Gas & Electric-plan may provide additional protection against creditors.
Net unrealized appreciation (NUA) is the difference between what you paid for employer securities and their increased value. You lose favorable tax treatment of NUA if the funds are rolled into an IRA.

Hopefully, these insights will be helpful as you plan your retirement from San Diego Gas & Electric.

For more information about this topic, view our e-book here: https://retirekit.theretirementgroup.com/will-your-retirement-plan-retire-with-you-e-brochure-offer

Featured Video

Articles you may find interesting:

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

San Diego Gas & Electric (SDG&E) offers both a traditional defined benefit pension plan and a defined contribution 401(k) plan. The defined benefit plan includes a cash balance component, where benefits grow based on years of service and compensation, with interest credits added annually. The 401(k) plan features company matching contributions and various investment options, including target-date funds and mutual funds. SDG&E provides financial planning resources and tools to help employees manage their retirement savings.

Record Profits and Investments: SDG&E reported record profits of $936 million for 2023, up $21 million from 2022. Despite this profitability, the company has faced criticism over high energy rates and efforts by local groups to replace it with a public utility. SDG&E continues to invest in infrastructure and diverse supplier programs, with $450 million contracted with minority-owned firms in 2023 (Sources: San Diego Union-Tribune, Voice of San Diego, Times of San Diego).

San Diego Gas & Electric provides RSUs to employees, vesting over time and converting into shares upon vesting. Stock options are not typically part of their compensation package.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------