The Four Things You Can Do With Your 401k When You Change Jobs

Your 401k plan is protected by the law. There are a lot of rules surrounding it so that it remains safe and so that you will definitely be prepared for retirement as long as you use your 401k wisely. These laws keep you from touching your account, and they also keep creditors from touching it if you end up in debt or claiming bankruptcy. There are very few times when you can really touch your account until you reach the retirement age.

One of those rare times, however, is immediately after you’ve left an employer that you have your 401k plan with, however. Your first option when you leave your employer is to roll your 401k over to your new employers 401k plan. This is fairly straight forward and you just contact each plan and tell them of your intentions and have them take care of it. Your second option is to do a 401k to IRA transfer. Again, just contact both account holders and make sure that they handle it and don’t try to put it through you. Your third option is to simply leave your plan where it is with your old employer. Your fourth option is to cash out 401k earnings. This is not advisable though and a lot of people won’t even mention it to you in fear that you’ll do it, because it greatly damages your retirement savings goals. There is a 401k withdrawal penalty for withdrawing before retirement age as well, and you’ll have to pay that as well as taxes.

Source: http://www.marsill.com/investing-news/the-four-things-you-can-do-with-your-401k-when-you-change-jobs/