• Matt Morizio

New Job, Old 401k

Changing jobs is always exciting…and anxiety-provoking, and encouraging, and a mixed bag of other emotions. You likely wrestled with the decision for quite some time. Throughout the decision-making process, I’m willing to bet that “what to do with my old 401k” never crossed your mind.

Oh, right, that…what should you do with it?

You have a few options:

  1. Leave it in your old employer’s 401k.

  2. Transfer it to your new employer’s 401k.

  3. Roll it into an individual retirement account (IRA).

Leaving it in your old 401k plan isn’t a problem, especially if you like what you’re invested in. But what if you change jobs 5 or 6 times throughout your career, and each time you neglect your old 401k and it stays where it is (which is what happens if you don’t voluntarily move it)? That means you have 5 or 6 old 401k’s tied to your name, and I’m going on a limb here - if you didn’t think enough to move them when you had the chance, you probably didn’t keep detailed notes about each one, and you’ll have a hard time tracking everything down.

If you like your old employer’s investment options and voluntarily decide to leave them in the plan, be aware that, according to some plan documents, investments of “X thousand dollars or less” aren’t allowed to stay invested once an employee leaves. Give your HR department a call if you have questions.

If you miss the boat on this and receive a random check for the entire amount after you leave your job, you have 60 days to invest it before you’re taxed and penalized.

Another option is to transfer the old 401k into your new retirement plan. If the investment options in the new plan are more appealing than your old employer’s plan, fill out the necessary paperwork and make the switch. If you’re indifferent toward the investment options, at the very least doing this will keep all your retirement dollars consolidated into one account.

Your last option is to roll your old 401k into an IRA and either manage it on your own or have your financial advisor manage it on your behalf. For those who like to have more control over their investments, this is the best option. You can either manage the money yourself or have a trusted confidant manage your retirement savings.

If this is your decision, remember, do not transfer your money from your old plan into your new plan. If you do that, you’re required to stay invested in your new 401k plan, and neither you nor your advisor are allowed touch the money until you either retire or change jobs.

All of these options are relatively painless. They require little more than paperwork, and you’re off to the races.

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#Retirement #401k


Investment advice offered through Beck Bode, LLC, a fee-only Registered Investment Advisor in the Greater Boston area.