Changing Jobs? Here's What You Can Do with Your Retirement Plan

Changing jobs is an exciting step, but it also comes with a lot of decisions—including what to do with your retirement savings. If you have a 401(k), 403(b), or another employer-sponsored retirement account, you might be wondering about your options. Here’s a simple breakdown to help you navigate this transition.

1. Leave It with Your Former Employer

In some cases, you can leave your retirement savings in your old employer’s plan, as long as your balance meets their minimum requirement. This can be a convenient option if the plan has good investment choices and low fees, but it’s worth reviewing to make sure it still fits your long-term goals.

2. Roll It Over into Your New Employer’s Plan

If your new job offers a retirement plan, you may be able to roll your existing balance into it. This can help keep your savings in one place and make it easier to manage. It’s a good idea to check with your new employer’s HR team to see if their plan accepts rollovers and what the process involves.

3. Roll It Over into an IRA

Another common option is moving your retirement savings into an Individual Retirement Account (IRA). An IRA often offers more investment choices than an employer plan. If you roll tax-deferred funds into a traditional IRA, your money continues to grow tax-deferred. If you have Roth funds, you can roll those over to a Roth IRA. If you choose to convert tax-deferred funds into a Roth IRA, you’ll pay taxes on the rollover now, but your withdrawals in retirement will be tax-free under certain conditions.

4. Cash It Out (But Beware of Penalties)

While cashing out your retirement savings might seem tempting, it’s important to understand the potential downsides. If you withdraw money before age 59½, you may owe taxes and a penalty. Plus, taking money out now could mean missing out on long-term growth.

5. Consider Any Vesting Rules

If your former employer matched your contributions, it’s worth checking the plan’s vesting schedule. Some employers require you to stay for a certain period before you’re fully “vested” in those funds. If you leave before reaching full vesting, you could forfeit part of your employer’s contributions.

Consider Your Options

There’s no one-size-fits-all answer when it comes to handling your retirement savings after a job change. The option you choose should depend on your financial goals, investment preferences, and personal situation. Taking the time to review your choices can help you stay on track for the future.

If you still have questions about your options, our team of retirement experts is here to help. You can reach out to us at any time to schedule a one-on-one meeting at your convenience.

The concepts expressed herein represent the views and opinions of Pension Consultants, Inc., and are not intended as legal, tax, or investment advice for any specific individual, account, or plan.