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401K: I quit my job, what do I do with my retirement account?

People leave their jobs all the time for all different reasons, but what do you do if you have a 401K retirement plan?

401k statement

People are leaving their jobs at higher rates than ever over the last two years.

If you’re one of millions deciding to leave, you may be wondering what to do with that 401K retirement plan you had.

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Here are 4 things you can do with the 401K at the job you’re about to leave

You can always just leave the money in your old 401K if you’re happy with the fees and investments.

This can only happen if your plan allows it to.

You can no longer contribute additional funds, so you’ll still want to open a new account wherever you end up next.

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Can your 401k plan get you a tax break?

If you don’t have over $5,000 invested, your old employer may roll it over into an IRA.

If the balance is under $1,000, you can likely get the money in a check.

The IRS will tax you around 20% for that check.

Another option is to roll it into an IRA yourself.

Is a 401k better than an IRA?

You could invest your money into anything you want this way.

You will need to deposit your entire account into the IRA.

Your third option is to roll it into a new 401K.

This can happen if the plan allows it, and you’ll want to ask for a direct rollover.

Retirement: Are retirement plans as successful as they say?

Finally, you could just cash it out.

You’ll have 20% withheld for taxes and another 10% for an early withdrawal fee if you’re under age 55.

Cashing out is where you’ll lose the most money.

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