What Happens to Your 401(k) When You Retire or Leave Your Job?
Leaving a job—whether because you are retiring, changing employers, or taking a different direction—does not mean your 401(k) disappears. The vested money in the account remains yours. What changes is that you generally stop making payroll contributions to that employer’s plan, and you may need to decide what to do with the account. In most situations, you will have four basic choices: Leave the money in your former employer’s 401(k) Move it to a new employer’s retirement plan, if permitted Complete a rollover to an Individual Retirement Account Withdraw some or all of the money Each choice has potential advantages, limitations, costs, and tax consequences. The right decision depends on your age, retirement timeline, need for income, investment options, plan fees, outstanding loans, and overall financial circumstances. Option 1: Leave the Money in Your Former Employer’s 401(k) Many employer plans allow former employees to leave their vested account balance in the plan, although the rul...