What to Do With an Old 401(k)
Changing jobs or retiring often leaves you with an important question:
What should I do with my old 401(k)?
Whether you’ve recently switched employers or haven’t touched the account in years, it’s important to understand your options — and the potential impact of each decision.
Option 1: Leave it with your former employer
If your previous plan allows, you may be able to leave your 401(k) where it is.
Pros:
Continued tax-deferred growth
No immediate action needed
Cons:
Limited control over investment choices
May be harder to manage multiple accounts
Option 2: Roll it over to an IRA
You can move your funds into an Individual Retirement Account (IRA).
Pros:
Broader investment options
Maintains tax-advantaged status
Helps consolidate retirement savings
Cons:
You’re now responsible for managing the account or finding professional help
Fees and costs may vary depending on the provider
Option 3: Roll it into a new employer’s 401(k)
If your new job offers a retirement plan, you may be able to consolidate your accounts.
Pros:
Simplifies your financial picture
Keeps your funds in one place
Maintains tax-deferred growth
Cons:
Investment options limited to what your new plan offers
Not all plans allow roll-ins
Option 4: Cash it out
You can take the money out entirely — but be cautious.
Pros:
Immediate access to funds
Cons:
Taxes owed on the full amount
Possible early withdrawal penalties (if under age 59½)
Loss of long-term retirement growth potential
So, what’s right for you?
There’s no universal answer. The best choice depends on your goals, your tax situation, and how hands-on you want to be.
Not sure where to begin? A licensed financial advisor can walk you through the pros and cons and help you make a confident decision based on your unique circumstances.
