What to do with your old 401(K) Plan
When you leave a job that offered you a 401(K) plan, it’s time to decide what to do with that plan. Options can include:
1. Leaving the funds in the old 401(k) plan
2. If your new employer has a 401(k) plan, you can roll the funds into the new 401(k) plan
3. Roll the funds into an IRA plan
4. Cash the 401(k) out
Cashing the 401(k) out is usually not the best option. Cashing out your 401(k) will result in taxes and penalties, and you will lose the opportunity to grow your retirement savings. Instead of cashing out your 401(k), you can roll it over into your new 401(k) or an IRA. This way, you can keep your retirement savings intact and continue grow them tax-deferred.
It’s fairly simple to roll over the old plan:
To roll over your 401(k) into an IRA or a new 401(k), once you have opened the new account, you then instruct your old 401(k) plan administrator to transfer the money directly into the new plan. This is called a direct rollover and it is the best way to roll over your 401(k) because it avoids taxes and penalties.
If you have any questions about rolling over your 401(k), you should consult with a financial advisor. They can help you determine the best course of action for your specific situation.
If you have questions about 401(k) rollovers, we’re happy to help you get started. You can book a 30 minute call to discuss the best course of action for you here: www.calendly.com/heysonder/intro