Handling Your 401(k) When You Quit

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Take it or Leave it?

There may be several advantages to keeping your 401(k) plan in place with the employer you're leaving.

The most apparent benefit to leaving things as they are is simplicity. You don't have to do anything special; just keep the old plan chugging along as before. That is a plus in itself.

Leaving your money with your old plan requires you to track another account in addition to your new employer's plan. And rolling it over into an IRA doesn't reduce the number of accounts. You may also forget the old account and lose all that money, in theory.

Reasons You May Not Want to Keep Your 401(k) at the Company You Leave

Your new plan may boast better investment options and lower fees than those in your new employer's plan. Also, if the new plan allows it, you could access 401(k) loans.

The Potential Benefits of Rolling the Money Over to the New Plan

Your new plan may have fewer or less attractive investment options and the fees could be heftier. Also, your new plan may not offer the free or low-fee advisory service that your old plan may offer.

The Cons of Rolling Over Into the New Plan

For some folks, opting for an IRA instead may be best. It may be that your new employer's program doesn't accept rollovers. In this case, if you have multiple old 401(k) plans, you can roll them all into the same IRA, or multiples.

The Potential Benefits of Rolling Your 401(k) Over to an IRA

You may also not like the old or new plan's investment options. In that case, you may consider what's on offer in an IRA. Fees are another factor to consider. A no-load IRA may have fewer fees than both your old and new 401(k) plans.

Finally, if your balance is high enough, you may be able to access free or low-fee investment advice from the manager of your rollover IRA.

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