After leaving a company, one of the many things that should to be addressed is what to do with your 401K. The easiest option is to leave it where it is. Many former employees do just that. If you have had only one previous job, it’s not a bad option. The more previous jobs you have had, the harder it is to manage multiple accounts. Many people do not manage prior 401Ks. They tend to forget about them. Not managing 401Ks can cause the owners to lose thousands of dollars.
Financially, the worst option is cashing out a 401K. There is a 10% penalty right off the top. At tax time, the government will want another 20%.
If you have a new employer, their 401K program may offer you the option of rolling over your old 401K into the new one. This option makes it easier to manage your money, although many people put their money into the account and forget about it.
Another option is to put your money into a rollover 401K. There are many options available. The internet is an invaluable tool when researching which company’s plan is best for your needs. An independent financial advisor can also help you evaluate your options because they are not tied to a specific company’s products. An independent financial advisor will work with you to create a plan that meets your financial goals.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Consult your financial professional before making any investment decision.
* The opinions expressed in this blog are those of the author and are not necessarily the same as those of Ausdal Financial Partners.
* Securities offered through Ausdal Financial Partners, Member FINRA/SIPC, 220 North Main Street, Suite 400, Davenport, Iowa 52801 (563) 326-2064. Joan K. Norton, CMFC, RFC, LLC and Ausdal Financial Partners are Independent Companies.