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How To Get Your Finances Back In Order For The Great Resignation Smart change: personal finance

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If you are lucky enough to have a 401 (k) account, this is a detail you will need to sort out when you quit your job.

While it can be tempting to take the money and run away, it should be a last resort for almost all retirement savings. If you are under 59 and a half, you will have to pay tax on the entire balance.

If you are under 55, you may also be charged a penalty equal to 10% of the amount by the IRS. And cashing in on your retirement would leave you without the funds you will need in your golden years.

Determine which of these strategies makes the most sense for your situation.

Keep your 401 (k) with your former employer

When you get a new job and get 401 (k), you might find that your old plan offers better investment options than your new plan. It’s an argument for leaving it where it is.

Most companies let former employees keep their 401 (k) accounts even after accepting a new job.

Transfer your old 401 (k) balance to your new employer’s plan

If you’ve found a new job that offers a 401 (k), ask HR if your new plan accepts rollovers from another 401 (k) account.

Not all employers allow 401 (k) rollovers, and some companies require new employees to work for a set period of time before they can enroll in the 401 (k) plan.

Turn your old 401 (k) balance into an IRA

Maybe your new employer doesn’t offer a 401 (k) plan, or maybe you want to go into business. Either way, transferring your old 401 (k) balance to an IRA is your strategy of choice.

—Ben Curry


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