How to Get a 401k From a Previous Employment

Take the amount of money waiting in the old 401k plan into consideration. If it's only a few thousand dollars, the bottom-line cost of cashing it out won't be that bad. If it's a considerable sum of money, you'll want to think through all your options.

Pay the penalties and taxes on your 401k money if you are in dire need of accessing it. The standard fees you'll incur include paying income tax on the amount of money you receive from the 401k built up during your previous employment and a 10 percent penalty on the sum you take out of the plan.

Consult a brokerage company about opening a rollover Individual Retirement Account (IRA) as a temporary measure. If you get your previous employer to transfer your 401k funds to a rollover IRA, you can then set up a regular or specialized IRA account to enjoy tax benefits on your future contributions.

Start up either a regular or Roth IRA after you get the 401k money from your previous employment into a rollover IRA. While both a regular and Roth IRA allow you to make tax-free contributions to your retirement plan, keep in mind that you will have to pay taxes on the money when you access it upon reaching retirement age. Work with your financial advisor if you are considering a course of action along these lines.

Stay abreast of changes to the minimums and maximums you are allowed to put into or access from an IRA or 401k plan. They change pretty much annually, as the IRS adjusts limits to reflect inflation.

Consolidate only if you feel it's absolutely necessary to do so. There's no harm in leaving your 401k from a previous employer to simply sit and accrue interest until you retire. You'll face no penalties or problems accessing the money in the future if you just leave it to sit, so long as the balance in your account is above the minimum threshold as determined by the IRS.