So you are leaving your job, hopefully for a better one, or god forbid, you’ve been laid off, do you know what to do with your 401(k)? Believe it or not, most people don’t. Here are a few options you can do with that 401(k) to better help you in retirement.

1. You can leave it where it’s at, as long as it is more than $5,000. That’s right, you don’t have to move it at all, WITH some exceptions. You will not be able to put any money in the account and your old employer will not be able to contribute any further monies either. If it’s less than $5,000, the company is legally obligated to tell you that while you don’t have to take it out, you do have to move it from their accounts. If you decide to leave it because there is more than $5000 in the account, it could be because your old company has better investment options than your new company or it could have lower fees. It’s best to check out both companies’ options before moving the monies. And remember, if you are not fully vested in the company, then any money they contributed, they can take back.

2. You can roll over your 401(k) to your new employer. Not all employers offer 401(k) plans so this may be why you chose to keep it with your old one. If you choose this, your money will continue to grow tax-deferred and it can be easier having everything in one place, rather than having two 401(k)’s out there. Be sure you understand the rules for your new plan if you chose to go with this option.

3. You can roll it into an IRA. A Rollover IRA is a retirement account that allows you to move your money from your former employer to an IRA with a bank or brokerage firm. Do your research and check on fees and commissions with any bank/brokerage firm offering you help with an IRA. IRA’s let your money continue to grow tax-deferred, you also have a broader range of investments when it comes to IRA’s, unlike with an employer’s plan with limited variety to choose from. If you are under 59 ½ , you can withdraw from an IRA, penalty free, for a first time qualifying home purchase and also for higher education expenses. Don’t forget once you reach 72, if the IRA is not a Roth, you will have to take annual required minimum distributions (RMD’s) from it or face penalties from the IRS.

4. You can decide to withdraw the money. However any financial advisor will advise you against this, unless you are in dire financial straits. That is because of the financial hit you will inevitably face with tax penalties from the IRS. Consequences of course depend on your age and circumstances, but you could be hit with income taxes and penalty taxes if you chose to do this without financial assistance/advice.

Most of all, don’t forget about a 401(k) if you leave a job. More and more people are retiring or being laid off and they forget that they had this account in the first place. If you find yourself in this situation, now is the time to call Capital Financial and Coach Pete D’Arruda and the team to help you decide what is the best decision for you. They can guide you and help you get your financial roadmap together and put you on the right path!