Icon

Savings and Investing

Life Changes

What do I do with my 401(k) when I change jobs?

This is a common question with 401(k) plans. Many people are unsure what to do with their plan when they leave their employer.   

You have several options. You can keep the money in your current plan or you can roll it over into a new retirement account. Each option has its advantages.

We’ll help you figure out the right one for you.

Leave your balance with the old plan. You can keep your money with your current 401(k) plan as long as your balance is at least $5,000. But you won’t be able to make contributions, and you are still subject to the plan’s rules and limited investment choices. This may be a good option if you’re between ages 55 and 59 ½ and you will need your retirement savings soon.

Roll your old plan over to your new employer’s 401(k) plan. This can be a good move if you are happy with the new plan’s investment choices and fees. Find out if your new employer’s plan accepts transfers; not all do.

Roll your old plan over to an Icon IRA. You can roll over your old 401(k) into Icon. Be sure to do a direct rollover so that taxes are not withheld.

Cash out your 401(k). NOT RECOMMENDED! If you take a “lump-sum distribution,” you will have to pay income taxes on the money. You will also pay a 10% early withdrawal penalty if you’re under age 59 ½. Not only do you lose money, but you lose valuable time in building savings, which you might never catch up.

 

NEXT UP The impact of high fees on savings How much can I contribute to my plan? What’s an ETF? Why Asset Allocation Matters Everything you Need to Know about Icon’s Fees What investments are available through Icon? Why do I need to answer a suitability questionnaire My employer is offering Icon. How does it work? Employer matching contributions–Don’t leave anything behind! Auto-escalation–A great idea The impact of high fees on savings How much can I contribute to my plan? Find out why it’s important to review your statement Save early and often What’s an ETF? High fees can erode your savings Annuities–What you need to know The basics of stocks and bonds Why Asset Allocation Matters The Savers Tax Credit – Are you taking advantage of it? What is a health savings account? A close look at Social Security Student loans feel like a weight When can I use my savings in retirement ? Emergency Savings Plan – What’s your plan? Do you receive a Form 1099? What you need to know Paying taxes as an independent contractor What if I want to take money out before I retire? What happens if I get fired or laid off? Naming a beneficiary What do I do with my 401(k) when I change jobs? Thinking of consolidating old 401(k) plans? Reserve mortgages, how do they work? Disability insurance, a great safety net Why it’s a good idea to have a will Using your home equity–Things to consider A close look at Social Security Student loans feel like a weight Emergency Savings Plan – What’s your plan?