What Is The Right Thing To Do With Your 401k if You Get a New Job?

So you’ve lost or changed your job, PennyGem’s Justin Kircher has some options for your 401(k).

Transcript

00:00 So you've lost or changed your job.

00:06 Here are some options for your 401k.

00:08 One course of action could be inaction.

00:11 You could leave your funds with your past employer.

00:13 CNBC says the investments will stop, but hopefully there will still be some growth.

00:17 The outlet does say most companies will only allow this if you have a balance of $5,000

00:21 or more.

00:22 If your new job offers a 401k, you can roll over your previous funds into a new account.

00:27 The balance says many companies offer a plan-to-plan rollover option, and there are typically no

00:31 penalties or tax burdens with this option.

00:34 If your new job doesn't offer a 401k, you can move the money into an IRA or individual

00:38 retirement account.

00:40 According to the balance, there should be no tax consequences with this move either,

00:44 and you can also decide how to invest those funds, whether it's stocks, bonds, mutual

00:48 funds, etc.

00:49 You could cash out and spend it.

00:50 However, the site says that if you're under the age of 59 and a half, you'll be paying

00:54 taxes on it, and there will likely be a 10% penalty.

00:57 It's possible that whatever you withdraw will be slashed in half, so maybe only go to that

01:02 well if you really need it.

01:03 (upbeat music)