One of the Most Overlooked Financial Decisions
When you leave a job, one big question often gets ignored: what should you do with your 401(k)? It’s easy to let it sit untouched, but that might not be the best move. Rolling it over—or not—can have long-term effects on your retirement plan, investment performance, and tax efficiency.
There’s no one-size-fits-all answer, but understanding the pros and cons of each option can help you make a confident, informed decision.
Option 1: Leave It Where It Is
If your old plan allows it and your balance is high enough (typically $5,000 or more), you may be able to leave your 401(k) with your former employer.
Pros:
- No immediate action needed
- Institutional investment options may have low fees
- Your money stays invested and continues growing tax-deferred
Cons:
- Limited investment control
- Harder to track and manage as you change jobs
- Former employer can make changes or close the plan
- Inactivity may lead to missed performance adjustments
Leaving your 401(k) behind is easy in the short term—but it could lead to neglect in the long run.
Option 2: Rollover Into an IRA
This option gives you more control and can integrate better with your overall financial strategy.
Pros:
- Wider selection of investment options
- Potentially lower fees
- Easier to consolidate with other retirement accounts
- No taxes or penalties if done properly
Cons:
- Slightly more complex to set up
- Requires active investment decisions or guidance
Rolling into an IRA is often the preferred strategy for people who want greater flexibility, especially when working with a financial advisor.
Option 3: Rollover Into Your New Employer’s Plan
If your new employer offers a solid 401(k) plan and accepts rollovers, you can move your funds directly into it.
Pros:
- Keeps all retirement assets in one place
- Maintains tax-deferred growth
- May offer automatic contributions and employer matching
Cons:
- Investment options may be limited
- New plan might have higher fees
- Some employers don’t allow rollovers
This option works best if you want simplicity and your new plan offers strong features.
Option 4: Cash It Out (But Be Warned)
Technically, you can take the money and run—but it comes at a steep price.
Cons:
- You’ll owe income taxes on the full amount
- If you’re under age 59½, expect a 10% early withdrawal penalty
- You lose the opportunity for continued tax-deferred growth
- It could impact your long-term retirement goals
Unless you’re in an emergency with no other options, cashing out should be avoided.
Key Questions to Ask Before Deciding
- How do the fees and investment options compare?
- Do you want more control or simplicity?
- Are you working with an advisor who can manage an IRA?
- Do you want to consolidate accounts to make future planning easier?
Your rollover decision shouldn’t be made in isolation—it should fit into your broader financial picture.
How MB Wealth Advisors Can Help
We help clients evaluate their rollover choices based on current holdings, retirement goals, and tax considerations. Our process ensures:
- No unnecessary tax triggers
- Transparent comparisons of all options
- Coordination with your retirement income strategy
- A smooth, compliant transfer of funds
Whether you’re rolling over one account or consolidating several, we make it easy and efficient.
Make a Decision That Supports Your Future
Leaving your job opens the door to better retirement strategies—but only if you make the right moves. Don’t let your old 401(k) become a forgotten asset. Take control and roll it into a plan that supports your goals.
To talk through your options, visit our Wealth Management Services or call (704) 584-9363. You can also reach us using the secure form at mbwealthadvisors.com/contact/#connect.