What To Do With A 401k From A Former Employer

What To Do With A 401k From A Former Employer


Hi welcome to another financial Friday
I’m Rebecca Agamaite and I’m Nick Letter and we are both Investment
Advisors at Advisors Management Group So many times people find themselves in
a situation where they have made a job change and they’ve left an old 401k
behind with that job. Nick do you have any suggestions on what someone should do if they find themselves in that situation? Yes Rebecca there’s actually
four things you can do when you leave a job and have an old 401k. The first
option would actually be just leave it there in the old 401k. Another option
would be to roll it into a new 401k or new retirement plan if your new employer
has one. You could also roll it into an IRA. And lastly you could always cash it
out. Wow you mean that I can actually cash
that out? Yes you can Rebecca however when you cash out a 401k you’re gonna
pay tax on everything that you take out and potentially pay a penalty by the IRS
as well. So actually what you’re saying is that
it might not be a very good choice and it may have some financial implications. Correct. So tell me about the other options. Okay
Rebecca. So one option is leaving it in your existing 401k. That can always be an
option unless your balance is very small your employer cannot force you to to
roll your money out of the plan, many people don’t know that. Another option
would be to potentially move it into your new plan at your new employer if
they have one, but you should double-check the rules on that and not
all plans allow rollovers. And then lastly rolling it into an IRA gives you
a lot of flexibility however when you do something like that you should always
look at any fees or commissions involved in that type of option as those
could get fairly costly. Great information Nick. Thank you so much for joining us today and remember if you enjoyed our video please like and share.

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