What Happens to A 401(K) After You Leave Your Job?

Your 401(k) may be subject to taxes or penalties when you get a new job – if you don’t make the right moves. Learn about consolidating and rolling your 401(k) balance into a new 401(k) plan or IRA.
Financial Expert
Managing Editor


Once you have made a decision about where you want your 401(k) balance to go, do the following:

  1. Ask the 401(k) plan administrator at your current employer about their distribution/rollover procedures.
  2. Provide the 401(k) plan administrator at your current employer with clear, written instructions about where you want the money to go.
  3. Make sure the institution that will be receiving your 401(k) rollover gets a copy of those instructions too.
  4. Check to see that the balance was received once you make the move to your new employer.

If possible, line up as much of this as you can before your last day of work, because timing is crucial.

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Richard Barrington has been a Senior Financial Analyst for MoneyRates. He has appeared on Fox Business News and NPR, and has been quoted by the Wall Street Journal, the New York Times, USA Today, CNBC and many other publications. Richard has over 30 years of experience in financial services. He has earned the Chartered Financial Analyst (CFA) designation from the Association of Investment Management and Research (now the “CFA Institute”).