Don’t leave your retirement savings behind when you change jobs

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When you leave a job, you obviously have a lot on your mind.

However, leaving and ignoring your old 401(k) retirement assets is like putting money in a box under your bed and forgetting it’s there. You need to create a plan for that money and find ways to reinvest it.

And in these uncertain times, when so many people are leaving or change jobs, the question becomes more urgent: What do I do with my 401(k) plan money from a former employer?

Depending on your personal situation and your 401(k) account balance, you will have several options.

If your balance is less than $1,000

If your balance is between $1,000 and $5,000

If your balance is over $5,000

If your balance is over $5,000, your former employer will allow you to keep your funds in this 401(k) plan.

However, there are reasons why you might prefer to do a rollover transfer: if your new employer offers a 401(k) plan with better investment options or lower costs, it would be a good idea to transfer money to maximize your income. (Conversely, if your new plan is more expensive or has lower investment options, it may be better to leave your money in the old 401(k) plan.)

Also consider whether you’d rather invest your money in an IRA, which will give you nearly endless investment options, but will require more skill and management on your part. These can be opened through an online brokerage firm, or at most banks, where you can ask for help opening an IRA account for the first time.

Finally, remember that you won’t be able to take out loans on an old 401(k) or IRA account – these only allow you to withdraw funds, which involves paying taxes and, in many case, an advance of 10%. withdrawal penalty. (Note that taxes are prepaid on Roth IRAs and any contributions can be withdrawn without penalty in most cases.)

If you want to borrow from your 401(k) plan, whether to buy or renovate a home, or to pay for other major expenses, you can usually only do so through your employer’s 401(k) plan. current. So, rolling over funds can again make sense if you want to access that money sooner rather than in retirement.

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