Q.

A.

What happens to my 401(k) if I change jobs?

When you leave a company, you basically have four options for what to do with the retirement plan. 

Option 1: If you’ve got more than $5,000 in the account, you can keep the money there indefinitely (but you can't add to it).

Option 2: Roll the money over into an IRA; you manage the IRA yourself, so you’ll have tons of choices about where to invest. But beware: Many plans charge fees. If you go this route, look for no-load funds.

Option 3: Roll the money into your new company’s 401(k) plan. You need to be at the company for a year before that’s allowed.


Option 4: Cash it out. But you already know doing so would subject the entire balance to income tax and early-withdrawal penalties. So just say no and speak to a representative at the fund who can help you make an informed decision.

-- The Nest Editors

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