Previous Employer Retirement Account: What are your Options?

I remember back to the first job I had and the benefit package included a 401(k). I called my mom and told her the news – she was so excited for me because it wasn’t something she had when first starting out and barely got one towards the end of her career. After leaving the company there wasn’t much guidance on my options moving forward. It felt a little overwhelming to have to navigate my options and try to understand what I could do.

Let’s take a look at what you could do:

• Leave the funds in the old employer plan
  1. If you aren’t sure what to do yet, you can leave the account open in the old plan
  2. You cannot make any more contributions though
• Rollover funds to new employer plan (if they accept transfers in)
  1. If your new employer offers a plan and allows transfer in, you could roll the funds here
  2. Allows you to make contributions to a larger starting amount
• Rollover funds to an Individual Retirement Account (IRA)
  1. You can open an IRA and rollover your funds here
  2. Contributions can now be made based on IRA rules
• Take the funds as cash
  1. The amount you take will be added to your taxable income for the year
  2. If you’re under 59.5 years old, a 10% penalty will be assessed on the distribution

There are different factors to consider before proceeding with any of these option and it all comes down to your current reality.

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