As a former Paladin client, I understand that times are tough. The unemployment rate in the U.S. is at the highest in decades. I’m in the trenches with you all, and I hear the pain in everyone’s voices. Unemployment is a scary and uncertain period in your life. But there are some things you can control…your retirement assets.

I am a professional money manager with 20 years experience, and my advice to you is take control of your biggest asset… your retirement account. If you don’t know how to handle your retirement savings while you partner with Paladin in a job hunt, you could end up sacrificing a good chunk of the money you’ve put away in your former 401(k) plan.

Your job search brings many new challenges, but most people don’t consider their retirement savings to be one of them. Nevertheless, you face the real risk of losing a substantial amount of your retirement savings to taxes if you make a wrong move. How could that happen? It boils down to four words: lump sum cash distribution.

One of the last decisions you’ll make at your old job is what to do with your retirement savings. And one of your options will be to take the money in a lump sum cash distribution. It may sound tempting until you learn how it works. First, the amount of the lump sum distribution paid to you will be reduced by a mandatory 20% as prepayment toward federal income tax owed for the year the distribution is made. Since the cash distribution will be included as regular income for the year received, your actual federal tax liability may be even higher than the 20% withheld when you file your tax return, and you may also be subject to state income taxes. What’s more, if you’re under 591⁄2, an additional 10% federal penalty tax and applicable state additions to tax may be imposed on the distribution.

When you do the math for a hypothetical 30-year-old in the 25% federal tax bracket facing a modest distribution of $10,000, you see that after taxes, including early withdrawal taxes, that means getting to keep no more than $6,500. And, state taxes could take another bite. Maybe worst of all, by taking a cash distribution, you run the risk that the money you actually receive will burn a hole in your pocket, rather than continue growing tax deferred for your retirement.

What Are Your Other Choices?

The important feature the above options share is that they let you avoid the immediate tax burden you’d have if you cashed out with a taxable lump sum distribution. Leaving your money in your former employer’s retirement plan or moving the money to a new employer’s retirement plan is fine. You’ll be subject to any investment choice limitations that might be associated with these respective plans. Your best option and what you should do is rollover your money to an IRA. Educate yourself as to why this may be the right move for you.

Seems like a silly thing to be saying these days, but not everyone sees it coming. Many professionals do not keep themselves “job search ready”.

Here are some suggestions for how to handle the first 24hrs after a layoff:

• Maintain your access to connections.
  • LinkedIn profile, special interest groups, associations, news, RSS feeds
  • Be sure to redirect email addresses and contact information so you stay connected – you don’t want to miss a call or email during this crucial time.
• Update your status. Get the word out. Let people know you are starting your search.
  • Send out a blast email to all your contacts
  • Post your status on LinkedIn, Facebook, Twitter
  • If you don’t have one of these accounts get one set up
• Get your resume written and ready to go. Timing is everything. You never know where the next lead is coming from and you want to be able to respond as quickly as possible.
• Go to a networking event
• Talk to your colleagues
• Join job searching groups
• Recruit recruiters: research and contact recruiters that specialize in your profession
• Set up meetings: Schedule information interviews or networking meetings with anyone and everyone you can
• Review your finances:
  • File for unemployment right away
    
  • If you received a severance package, make sure you understand it
• Set up your new office: Your job is now is finding a new job and need to have a space dedicated to the task

Checking this list off in the 1^st 24 hours will set things in motion and hopefully help you sleep a little better.
If you have other recommendations to share, please add your comments.

Our economy has created a stir of anxiety and fear lately. We are asking ourselves questions: Is my company going to have major layoffs?  Why are there so many closed door meetings lately?  What am I going to do if I lose my job?

Even top performers and producers are worried and anxious about their job security.

What can you do to stay calm and enhance your chances of staying employed until things shift their way around? Here are a few tips and food for thought:

Go beyond the call of duty: Exceed expectations and volunteer to complete extra projects outside of your day to day responsibilities.

Make yourself visible: If you’ve been hiding behind your cubicle the last 6 months, chances are, you haven’t been noticed. Make the effort to say hello to people every day. Have a positive, upbeat attitude that will make the executives remember you.

Be punctual: Always arrive to work early or on time. If you have been strolling in 10-15 minutes late each day. Stop. Co-workers, including your boss, notice and so should you.

Don’t gossip and remain positive: Maintaining an upbeat attitude at work is essential during times like these. Office gossip tends to explode during an economic downturn. Always be professional and find helpful and creative ways to be the example.

Be prepared: There are some things you have no control over, no matter how proactive and professional you are. Update your resume and professional references, beef up your skills. Sign yourself up to social networking sites.

Every now and then, when I ask a candidate why he left his previous positions, there’s one instance that he isn’t too proud of.  Off the bat, he starts his explanation with something like “So, OK, here’s what happened,” and I’m taken on a whirlwind response for ten minutes about how this guy did this, that project wasn’t interesting, there was a personality conflict from day one with her.  I’m suddenly confused, doubtful, and wondering what really happened.

We all leave a job at some point and time.  Sometimes we leave on our own, sometimes we’re laid off, sometimes we’re fired.  The facts of why you left your positions are just that - facts.  Don’t be ashamed, don’t try to make them something they’re not.

Make sure you’re able to answer why you left a position in a cut-and-dry, confident, brief response.  If it wasn’t a perfect fit, and you left on your own, just say it.  If it was a downsizing, just say it.

Here’s some explanations that are cut and dry, and work really well:

• I was not growing, and there was nowhere for me to go in the company.  It was time for a change, and that’s when I found my next position.
• My position was eliminated, and I was laid off.
• The position stopped being a challenge to me, and I decided to leave the company to look for something more in line with my goals.
• I was let go.

You’ll avoid painting a really complicated picture that probably doesn’t need to be that complicated.

Let the interviewer ask any follow up questions if they want more information.  At that time, you can go into what details the interviewer wants to know.  As always, make sure to remain positive in your response; don’t ever speak poorly about a past company, manager or coworkers.  And make sure to close your responses by pointing to what lessons you took from the experience that apply to where you’re going next.  Your interviewer will come away with a confident and focused idea of who you are, where you’re heading, and hopefully, how you’d fit in on their team.