What happens to my 401k if I leave my job? (funds, taxes)

[mc33433]

I am considering moving on to a new opportunity, though not immediately. I have been with my current firm 6 years, and have a 401k with my contributions and some company matching. What happens to my 401k if I leave my current company? What do I personally have to do to ensure I don't lose anything?

[oneasterisk]

It continues to exist. You can roll it into your new job's 401k, or if you don't want to do that then you can roll it into an IRA.

[mc33433]

Thanks. So I guess this is something I handle with my payroll or human resources department when I choose to leave?

[ML North]

Originally Posted by mc33433

What happens to my 401k if I leave my current company?

Your coworkers divvy it up by seniority.

[The Dissenter]

Originally Posted by mc33433

Thanks. So I guess this is something I handle with my payroll or human resources department when I choose to leave?

Most likely, yes, but also check if your company has any self service tools that will allow a rollover of the 401K. I switched companies and was able to do a rollover from my old 401k to a IRA all online.

[oneasterisk]

Originally Posted by mc33433

Thanks. So I guess this is something I handle with my payroll or human resources department when I choose to leave?

Yup you can speak to them about it. Mine were held by Fidelity so I chose to just leave it there and I managed it the same way. When it came time to finally transfer it, I just worked with the HR folks at the new job and they took care of transferring it for me.

[mc33433]

Thanks everyone. I never really think about my 401k - and I always thought I would want to stay at this firm longer, but plans change. This is helpful.

[Celestyn]

If you decide to roll it into an IRA or your new company, you can have the IRA company/new company handle the rollover. This would minimize the chances of you accidentally ending up with a check in your name that would trigger tax withholding. If you just get a check sent to you, taxes may be withheld and you will have to come up with the balance to put into your new account to avoid penalties.

[md21722]

You may not need to deal with your HR department at all. Generally you just deal with the plan administrator. Your HR department will notify the 401(k) administrator if you change jobs. Your 401(k) will continue to exist and increase or decrease in value depending on your funds, but you won't be able to make contributions or take loans against it. If people are happy with the 401(k) provider they may choose to leave it where it is for years.

You can convert it to a "Rollover IRA" where it becomes an IRA with a provider that you choose, such as Fidelity and you can make IRA contributions, etc. Converting it to an IRA doesn't mean you have to keep it as cash. You can invest it in mutual funds, stocks, etc. Other will move the funds in the 401(k) to the 401(k) plan offered by their new employer. This way all your funds are in one account.

[mc33433]

Originally Posted by md21722

You may not need to deal with your HR department at all. Generally you just deal with the plan administrator. Your HR department will notify the 401(k) administrator if you change jobs. Your 401(k) will continue to exist and increase or decrease in value depending on your funds, but you won't be able to make contributions or take loans against it. If people are happy with the 401(k) provider they may choose to leave it where it is for years.

You can convert it to a "Rollover IRA" where it becomes an IRA with a provider that you choose, such as Fidelity and you can make IRA contributions, etc. Converting it to an IRA doesn't mean you have to keep it as cash. You can invest it in mutual funds, stocks, etc. Other will move the funds in the 401(k) to the 401(k) plan offered by their new employer. This way all your funds are in one account.

Makes sense - Thanks!