What happens to your 401(k) after you leave a job? 

What happens to your 401(k) after you leave a job?

You probably don't think about your 401(k) plan when you're changing jobs or have been laid off. Even if you don't deal with that money right immediately, it still pays to incorporate it into your relocation plans.

What happens to your 401(k) after you leave a job?

Here some things you should think about once you're ready to concentrate on what to do with your old 401(k).

1. What options do I have for my current 401(k)?

When you leave an employer, you have several options: – Leave the account where it is – Roll it over to your new employer’s 401(k) on a pre-tax or after-tax basis

1. What options do I have for my current 401(k)?

– Roll it into a traditional or Roth IRA outside of your new employer’s plan – Take a lump sum distribution (cash it out)

2. If you have an outstanding 401(k) loan

Did you take out any loans against your 401(k)? If you did and you're leaving the company, whether voluntarily or involuntarily, you "have the option to repay the loan to an IR.

3. Compare plan costs

As you compare the plan costs, ask for the participant fee disclosure for each plan. That document will reveal all the fees — both obvious and obscure — associated with each plan.

4. You can temporarily leave your account with your former employer

If your balance is $5,000 or more, you can leave the money right where it is, giving you time to decide the best course of action for you. In this case, you’re under no obligation to move your money.

5. Keep tabs on the old 401(k)

If you decide to maintain an account with a previous employer, make sure to keep your address up to date with the 401(k) plan sponsor,

5. Keep tabs on the old 401(k)

read your statements carefully, keep up with any paperwork pertaining to your account, and keep an eye on the company's performance.

6. Rolling into an IRA? Stay on top of the move

Your IRA sponsor or advisor will assist you in the process if you choose to roll over your 401(k) into an IRA, ensuring that the funds arrive at their intended location in a timely way.

7. Follow the money

Keep notes on who you spoke to and when. Be sure to follow up until your money is safely in its new home and that you have written proof.



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