New Job! Exciting…But What Happens with Your Old 401(k)?

New Job! Exciting…But What Happens with Your Old 401(k)?

Landing a new job or starting a new career is an exciting chapter in life. But with change comes important financial decisions—like figuring out what to do with your old 401(k). At Financial Plan Providers LLC, we’re often asked:“What should I do with my previous employer’s 401(k) plan?”

Let’s explore your options:

1. Leave It with Your Previous Employer

You can leave your money in your former employer’s 401(k), depending on the plan’s minimum balance requirements. However, managing multiple retirement accounts can get messy over time—especially if employers switch providers or merge with other companies. Did you know? Research from Capitalize found that over 24.3 million 401(k) accounts have been left behind by job changers.

2. Roll It Over to Your New Employer’s 401(k)

If your new employer offers a 401(k) plan that allows rollovers, this can be a simple way to consolidate and manage your retirement funds. Some plans even offer better investment options and lower fees. Tip: Use a direct rollover to avoid taxes and penalties.

3. Roll It Into an IRA or Roth IRA

Want more control and broader investment options? Rolling your 401(k) into an IRA (Traditional or Roth) can give you flexibility and control over your retirement funds.

• Traditional 401(k) contributions? Roll into a Traditional IRA to defer taxes until withdrawal.

• Roth 401(k) contributions? Roll into a Roth IRA for potential tax-free growth and withdrawals.

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4. Cash Out (Not Usually Recommended)

While it’s an option, cashing out your old 401(k) means the money will be taxed as income—and you may face additional penalties, especially if you’re under 59½.

5. Roll It Into an Annuity

Another strategic option is to roll your old 401(k) into an annuity—a financial product designed to provide guaranteed lifetime income, especially useful during retirement.

Benefits of using an annuity:

• Protection from market downturns

• Tax-deferred growth

• Guaranteed income you can’t outlive

  
  

Tip: Not all annuities are created equal! Work with a trusted advisor to understand the fees, terms, and benefits of different annuity options that fit your retirement goals.

Below, we’ve included a helpful flowchart that outlines your 401(k) rollover options.

Before making any decisions, we strongly recommend talking with a financial advisor. The team at Financial Plan Providers LLC is here to help you make the most informed and strategic choices for your financial future.

Have Questions About Your Financial Situation?

At Financial SPlan Providers LLC, we specialize in personalized financial advisory . With over 15 years of experience, we’ve helped clients navigate market complexities and build tailored financial strategies.

Whether you're planning for retirement or looking to optimize your financial future, our expert advisors are here to guide you. Contact us today to schedule a consultation and take the next step toward achieving your financial goals.

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