Portability means that you have the right to keep vested retirement benefits when you leave an employer. Depending upon the employer and whether you have a DB or DC retirement plan, this portability can be in the form of:

• portability of benefits (receiving benefits years after you leave the employer in whose plan you vested)

• portability of assets (you take the pension funds with you when you leave an employer)

• portability of service (prior years of service working for other employers are counted when determining benefits. This is the method Social Security uses.)

When you take a cash settlement, you are liable for income taxes on the amount withdrawn unless the withdrawal is the amount you contributed from after-tax income. Or, you may make a direct rollover into an IRA.

Taxes on a withdrawal from a qualified pension plan may be deferred by rolling over at least 50 percent of the amount due from the company into an IRA within 60 days. Once a partial rollover is made, later distributions will not qualify for five- or ten-year averaging.