401(k) basics · 7 min read
What Happens to Your 401(k) When You Leave a Job?
A job change can be a valuable time to organize retirement money around the protection, growth, access, and income you want.
You may have more than one choice
Depending on the plan, you may be able to leave the money where it is, move it to a new employer's plan, complete a rollover to an IRA, or take a distribution. Each path can offer different choices for management, access, protection, and future income.
Four common paths
- Leave the money in the former employer's plan, if allowed.
- Move it to a new employer's eligible plan, if accepted.
- Roll it into an Individual Retirement Account.
- Take a distribution, after understanding the possible tax effect.
Connect the money to your retirement goals
Ask how each choice supports what matters most to you. Do you want continued market participation, protection for a portion of the money, easier account management, flexible access, or a future lifetime-income stream? Seeing the choices side by side can make the next step clearer.
Use the correct rollover process
A direct rollover generally sends eligible money directly to another eligible plan or IRA. If a distribution is paid to you, withholding and a 60-day deadline may apply. Confirm the process with the current plan, receiving company, and a qualified tax professional before requesting a check.
The plain-language takeaway
Your old 401(k) can become an important building block in a more complete retirement strategy. A free review can help you understand what you have and explore how each option supports your goals.