what to do with 401k after leaving job reddit

what to do with 401k after leaving job reddit


What To Do With 401k After Leaving A Job

When you leave a job, it may be confusing to decide what to do with your 401k. Luckily, you have a few different options depending on your situation.

Options for Your 401k After You Have Left Your Job

  • Leave the 401k in Your Current Plan: If you do not need the 401k money in the near future and you are comfortable with the investment plan, you may opt to leave it in the plan you currently have. This may be the simplest option.
  • Rollover to a New Employer’s Plan: If you have a new job with a 401k plan and it is allowed, you could rollover your old 401k plan into the new plan. You will want to check to see if you are eligible to do so, as some 401k plans do not allow transfers from other plans.
  • Rollover to an IRA: You may also choose to take the money from your 401k plan and move it into an Individual Retirement Account (IRA). This option can give you additional control over your money, but you may have to pay taxes.
  • Cash Out the 401k: Finally, you can take the money out of the plan and use it for other purposes. However, if you are under the age of 59 and a half, you may be subject to taxes and penalties.

What To Consider Before Deciding

When deciding what to do with your 401k, there are a few key things to consider.

  • Taxes: Moving money out of a 401k plan will typically result in a tax bill. Keep in mind that if you are under the age of 59 and a half, you could be subject to additional taxes and penalties as well.
  • Timeframe: If you need access to this money soon, it may be best to take it out of the 401k plan and pay taxes. However, if you do not need access to the money soon, you may be better off leaving it in the plan or rolling it over to an IRA.
  • Fees: Taking money out of a 401k plan can result in fees as well. Be sure to check the fees associated with any option before making a decision.

In conclusion, when you leave a job, you should consider your options carefully when deciding what to do with your 401k. Make sure to consider the taxes, timeframe, and fees associated with each option to make sure you make the best decision for your situation.

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