How To Handle Your 401(k) When You Change Jobs

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

Although some people are fortunate enough to find a job that they can excel and grow in at the start of their career, many others experience a job change at least once during their time in the workforce. But when the position being left had offered a 401(k), what is one to do with the money that has been invested and saved? Below, we offer some advice on how to handle your 401(k) as you begin a new journey in a new job:

Leave your money where it is: Even if you will no longer be a contributing employee, some employers may allow you to keep your money in their 401(k) plan. However, if this is the option you choose to use, ask your previous employer for all of the rules, regulations and policies regarding the plan, as you may be subjected to some new management fees or have different withdrawal opportunities.

Roll your money over: Should your new employer allow you to roll over previous 401(k) funds, this may be the right option for you as it will allow you to keep all of your retirement savings in the same place - past and future. But, like we said in our previous tip, there may be different rules that apply to rolling over savings, so speak with your new employer to learn which do and do not apply to you if this is the approach you choose.

Open an IRA: If you don't have the opportunity to roll your savings into a new 401(k) plan yet, or if your new employer doesn't offer a 401(k) plan at all, consider opening up an IRA account and place your previous savings in there. Just like in a 401(k), your money can grow on a tax-deferred basis in an IRA, and you may even find that more investment opportunities are presented to you.

Avoid cashing out: As you work out the details on how you'll continue to save for retirement, the one thing you shouldn't do in the meantime is take out what you've already saved. Not only will doing so put you back to square one in your retirement saving efforts, but unless you've reached retirement age, you'll have penalties to deal with.

As you weigh your options, your best bet is to meet with your financial planner, since they know your financial goals and can therefore determine which solution is best for you depending on the opportunities available. Here at American Investment Planners LLC, our financial planners are dedicated to learning all about your investment philosophy and financial needs, so we can create a retirement planning strategy that brings you success even when you accept a new offer of employment.

For more information about our retirement planning services, please call (516) 932-5130 today.