You've worked hard to save money in your
401(k) plan. But now that you're moving employers, what will happen with all of
the money you saved? That choice is up to you. Consider your options for what
to do with your 401(k) when you change employers.
Are you happy with your current 401(k) plan
and its investment options? If so, you may have the opportunity to leave your
plan where it is. This option is also the easiest, since leaving your 401(k)
with your original employer won't require you to take any action.
However, not all plans will allow you to
maintain your account after you've left your employer, and even if your
previous employer allows you to leave your plan, if you have a low account
balance, they may elect to distribute the funds back to you. Check in with your
plan administrator to see if leaving your 401(k) is an option.
Does having many different financial accounts
stress you out? If so, you may want to consider consolidating your accounts by
transferring assets from your old 401(k) to your new employer's plan. This
option will be especially useful if your new employer's plan has more
flexibility and investment options.
However, some employers don't allow for such
transfers, so you will first need to check in with your new employer to ensure
they allow for this action.
Would you like to maintain a tax-advantaged
retirement account but have more investment options? If so, rolling over your
assets into an IRA account might be a good option for you. An IRA rollover
allows you to continue investing in a tax-advantaged retirement account while
giving you more control over your investments.
Just remember that by eliminating your 401(k),
you may have less creditor protection and could lose access to a 401(k) loan.
Do you need cash now? If so, you can cash out
your 401(k) plan early. This will give you access to your money right away,
which you can use to pay for expenses, a house, education costs, or anything
else you might need.
However, you will pay a hefty price to do so.
Cashing out a 401(k) plan before retirement age could result in paying ordinary
income taxes on your account balance, along with a 10% early withdrawal
Changing jobs can come with stress and
logistical challenges. But, when it comes to your old 401(k) plan, it's good to
know your options so that you can feel at ease. Because at the end of the day,
the money in your 401(k) belongs to you, and you should feel empowered to make
the best decision for yourself and your family.
Ready to take action or want to learn more? We're here to provide personalized
guidance based on your unique circumstances, ensuring your financial