What to do with your old 401(k)?

“What should I do with my old 401(k)” is one of the most common questions I get asked by new financial planning clients. Answering this question is often one of the biggest financial decisions you need to make when switching jobs. You essentially have four options to choose from, keep your old 401(k) where it is, rollover your 401(k) to an IRA, rollover your old 401(k) to your current 401(k), or cash out your retirement plan.

There are a few things to consider when making this choice, including your age, your 401(k) balance, your investing knowledge, and the investment options in both your old and new retirement plans.

Your Age and Your 401(k) Rollover

In most cases, if you make withdrawals from your retirement account before age 59.5, you will owe both taxes and penalties. However, rolling over your plan to an IRA or another retirement account is not a taxable event and will not incur taxation or penalties at that time.


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