That 401(k) from Your Old Job Can Still Help You

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Starting a new job is exciting. More often than not, it's also a sea of paperwork. Choosing insurance plans, providing emergency contacts, agreeing to the company handbook — no wonder if all blends together. The same is true of leaving a job, and it's not surprising when some things get left behind.


One of those things might be your retirement savings. If you (and hopefully your employer) have been contributing to a 401(k), that's money you've earned and ought to have. You've got a couple of options for that account.

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First, you can leave it be. You and your employer won't contribute anymore, but you'll still get updates from the company about how your money is doing. Some 401(k)s don't stay open if there's less than a certain amount in the account, so your company may wind up sending you a portion, minus taxes and early withdrawal fees.


Next, you can roll it over. If your new employer has a 401(k) on offer, see if they'll accept the savings you've already got. If not, consider an independent move like opening an individual retirement account, or IRA. Your employer won't match contributions, and there may also be limits on how much you can add each year.

You can also cash out early by liquidating your 401(k). This is called taking a lump-sum distribution, but it comes with some penalties. You definitely won't get back the full amount you put in, and it'll be taxed come the new year. Still, better to start planning for your retirement plan, and the earlier the better. Talk to HR or a money manager to answer your questions. It'll super pay off down the line.