Fri Aug 16 2024, by Tyler Gardner

Exploring Your Options for an Old Employer's 401k

If you currently have a 401k at an old employer, remember you have three options. I'm Tyler, a former financial advisor and portfolio manager, now dedicated to providing free financial content to help you navigate your financial journey without the cost.

1. Leave It Where It Is

If you like the investment options and are aware of the administrative fees being charged, then great! You will incur no penalty, and you can leave it there as long as you'd like.

2. Roll It Over to an IRA

You could roll it into a pre-tax account, such as a traditional IRA, or to a post-tax account like a Roth IRA. However, be mindful that rolling it over will trigger a significant tax event, so it's advisable to consult your CPA.

Additionally, remember that if you choose to roll it over, you've essentially sold the assets in the 401k and are rolling over cash, which means you will need to reinvest that cash once inside the new IRA.

3. Liquidate the 401k

You could choose to liquidate the 401k, sell the assets, and take the money. However, if you are under 59.5 years old, you will incur a 10% penalty and be required to pay ordinary income tax on this withdrawal. Generally, most people avoid option three unless they truly need the funds.

If any of this information is helpful, please like and follow, and I'll keep aiming to guide you one step closer to financial clarity.

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