Are you leaving your employer soon to retire or change jobs? Will you be receiving a sizable lump sum payment from your 401(k) or other company-sponsored retirement plan? Think twice before you walk out the door with what may be the biggest check you’ll ever see in your life. What you do with that money may save you — or cost you — thousands of critical retirement dollars.

The standard advice is to roll the lump sum over into an individual retirement account (IRA), and that may be good advice for you. But there are numerous other options to consider as well, say Certified Financial Planner professionals.

Leave it in your employer’s plan. You may have several reasons for considering this option. First, you are less likely to expose the money to creditors. Federal law fully protects some qualified retirement plans, such as 401(k)s, from creditors, and partially protects some other types. Take the cash from the account and creditors will have full access to it. Assets in IRAs are not federally protected, though most states offer limited or full creditor protection.

You also may want to leave the assets in your current plan if it offers better investment options than a new employer’s plan. Also consider leaving the money in the plan if you need to borrow from the plan. You can’t borrow from an IRA. Also unlike an IRA, it’s possible to withdraw money from your employer’s plan for retirement before age 59 12 without an early withdrawal penalty.

Be sure the plan allows you to leave the money in it. Some don’t, and you don’t want to suddenly receive a distribution check with 20 percent held back for taxes.

Leaving the money in the plan may not be a good idea if you name your children or grandchildren as beneficiaries. The employer will likely pay out a single lump sum when you die and your heirs will get hit hard with taxes. Unlike a spouse, they can’t roll it into their own IRAs and stretch out the tax deferral over their lifetime.

Roll it into a new employer’s plan. As mentioned above, the main caveat is if the old plan has better investment choices. Just be sure your current plan transfers the money directly to the new plan (trustee to trustee). Don’t touch any distribution check. Otherwise you could lose a chunk to taxes that you can’t get back until you file your next tax return.

Take the cash. While it’s usually better to leave your money in a tax-sheltered account to allow it to continue to grow tax-deferred, you may want the cash, or some of the cash, to buy a business or pay for other critical purposes. You will pay ordinary income taxes on the cash and you’ll probably pay a ten-percent penalty on the distribution if you take it out before you turn 59 12. For people born before 1936, you may elect to use a ten-year averaging method, which can help reduce the tax bite.

Take the company stock and roll over the remaining assets. Do you have a lot of significantly appreciated company stock in your plan? If so, investigate with your planner the tax advantages of taking out the stock but not rolling it over into an IRA. You’ll pay ordinary income taxes on the distribution, but only on the value of the stock at the time it was put into the account. You don’t pay taxes on any appreciation, current or future, until you sell the stock, and then it’s likely that it will be only at your capital gains rate, which would be no higher than 20 percent. Meanwhile, you may want to roll the remaining account assets into an IRA.

Roll over into an IRA. Still often the best choice. You’ll have more investment options than leaving it in an employer’s plan and, like your spouse, nonspousal beneficiaries can stretch out the required distributions over their lifetime. If you think you may want to roll the assets into another employer plan in the future, but can’t right now, put the money in a conduit IRA. Don’t mix it with existing IRAs. You also may be able to roll the IRA into a Roth IRA.

Charles S. Plauche’ is a CERTIFIED FINANCIAL PLANNER. He and John C. Bergeron are partners with Century Investment Group, 507 Franklin Street, Natchez, MS 601-442-0088; 800-308-5388; FAX 601-442-3005