What Should You Do With an Old 401(k)?
If you've changed jobs and still have money in an old 401(k), you're not alone. Many people aren't sure whether they should leave the account where it is, roll it into an IRA, or move it into a new employer plan.
Each option has advantages and trade-offs depending on your financial situation and long-term retirement goals.
Your Main Options for an Old 401(k)
When leaving an employer, there are generally four options for your retirement account.
• Leave the money in your old employer’s plan
• Roll the account into an IRA
• Move the money into your new employer’s retirement plan
• Cash out the account (which often creates taxes and penalties)
The best option depends on factors such as investment choices, plan fees, tax considerations, and your overall retirement strategy.
How I Help Clients Think Through This Decision
Deciding what to do with an old 401(k) is ultimately a capital allocation decision. The goal is determining where your retirement assets should be positioned to best support your long-term financial strategy.
When working with clients, we look at:
• Investment options available in each account
• Fees and plan costs
• Tax considerations
• How the decision fits into your broader retirement plan