Have you ever had to change jobs?
Switching jobs can be an exciting time in your career, but it also means making some important financial decisions, including what to do with your old 401(k) plan.
When you leave your current employer, one of the first things you’ll need to do is figure out how to handle your 401(k) plan.
This can be a complex decision, but with the right guidance, you can make the transition as smooth as possible.
- Take your previous employer’s advice on what they want you to do
It’s always a good idea to ask your employer what they want to do with your 401(k) plan. Some employers might have specific rules or policies in place that dictate what you can and can’t do with your plan.
If your employer has guidelines, it’s important to follow them to avoid any penalties or fees. However, if they don’t have any specific requirements, you’ll have a few options to consider.
- Keep your savings in your old 401(k) plan
One option is to simply leave your money in your old 401(k) plan. This can be a good choice if you’re happy with the investment options and fees associated with the plan. Leaving the funds can also simplify your financial management, as you won’t need to move the funds to a new account.
Just keep in mind that it is important to review how it will be invested and make any changes you think are appropriate for your own situation based on advice from a financial advisor.
- Roll it over into your new employer’s plan
This can be beneficial in many ways, as the new plan may offer lower fees or better investment options that align with your financial goals.
Having all of your retirement savings in one place can also make tracking your progress easier.
Before making any decisions, it’s essential to speak with a financial advisor who can help you compare the investments and features of both plans to make an informed decision.
- Roll over your 401(k) to an individual retirement account (IRA)
If you’re not happy with the investment options or fees associated with your old or new 401(k) plan, you may want to consider rolling over your funds to an Individual Retirement account (IRA) which can offer more investment options and lower fees than a 401(k) plan, and you’ll have greater control over your retirement funds.
Be sure to carefully evaluate the other features of the account or you may also want to consult with a financial advisor to ensure that you’re making the best decision for your individual needs.
- Cash it out
When switching jobs, the final option is to cash out the funds which might seem like a tempting choice as it provides immediate cash.
However, you’ll be missing out on the potential growth of your retirement funds over time. Carefully evaluate the long-term costs and benefits before cashing out.
Here at Gainspoletti Financial Services, we offer time-tested advice on how to navigate through these options. We’re here for you when it comes to managing your 401(k) plan and making sure it’s as easy as possible for you to take care of business while you’re at your new job. Schedule a call!
Please note, there may be termination fees involved in a rollover and not all employer plans accept rollovers. Individuals under 59 ½ who choose to cash out are subject to a penalty of 10% in addition to income taxes. Be sure to consider all of your available options and the applicable fees and features of each option before moving your retirement assets.