Changing jobs can be a stressful life event with lots to consider, especially when it comes to your 401(k). It’s not always top-of-mind since few companies offer these plans
So, what do you do with your 401(k) when you change jobs? Here are four options:
- Rollover to your new employer’s plan
- Open an Individual Retirement Account (IRA)
- Leave the account where it is
- Cash-out your 401(k)
Changing jobs can be a stressful life event with lots to consider, especially when it comes to your 401(k). It’s not always top-of-mind since few companies offer these plans.
1. Rollover to your new employer’s plan: This is often the best choice if it meets your investment needs. Consider any costs involved in opening a new retirement plan.
2. Open an Individual Retirement Account (IRA): While IRAs offer many investment options, they may come with extra fees for managing your account. Compare them to your new employer’s plan.
3. Leave the account where it is: Keeping your Saveday account with your previous employer may have benefits, like low or no management fees. Keep in mind that since you will no longer be on the previous company’s payroll, you will not be able to contribute to your 401(k). Your funds will remain as is. You will be alerted if your previous company decides to close their plan with Saveday so you can roll your funds over to a new provider.
4. Cash out your 401(k): This is usually considered the worst option due to taxes and penalties. Consult your financial advisor before considering this route.
Remember, cashing out your 401(k) can lead to hefty taxes and penalties, especially if you’re under 59 ½. Plus, you might be tempted to spend it instead of saving it for retirement. It’s usually safer to reinvest or keep your money where it is.
Before making any big decisions, understand your retirement plan’s fees, investment options, and benefits. This way, you can manage your assets wisely and ensure they’re working for you.
