What Happens to 401k When You Quit

Keep your 401(k)  with your old employer

You can start contributing to your new employer plan and allow the money in your old 401(k) plan to grow.

Roll your 401(k) over to your new employer’s 401(k)

This makes sense when your new 401(k) has lower fees and better investment options than your previous employer’s 401(k) plan.

Rollover your 401(k) into an IRA

If the IRA has lower fees and access to better investment opportunities, this move makes sense.

What Can You Do With Your 401(K) After You Leave Your Job?

Take distributions

If you are 59 ½ and above, you can take qualified distributions from your 401(k) without being charged a 10% early penalty fee.

Cash out

If you cash out before age 59 ½, you’ll have to pay income tax on the full balance plus a 10% penalty on the withdrawal and relevant state tax if applicable.