- Don’t overlook 401(k)s from past jobs. The account value is probably still growing and the money is rightfully yours in retirement.
- You can roll over an old 401(k) into a personal IRA and often into your new employer’s 401(k) without penalties or tax consequence.
- The Labor Department and Pension Benefit Guaranty Corp. are two of the free resources you can tap to help you locate 401(k)s from past jobs.
People move through their careers – changing jobs and locations more often than they did in previous generations – but their retirement accounts don’t always follow them. Leaving an employer-sponsored retirement account at your old job can happen for a number of reasons, but it is important to remember that this money is still rightfully yours. What’s more, it is still being invested as you left it and it is an important piece of your total retirement puzzle.
Let’s touch on your 401(k) rollover options and then look at a few resources to help you track down your old accounts.
401(k) Rollover Options: A quick summary
If you leave an employer – regardless of the reason – and you built up savings in a 401(k) during your time with that employer, you have three major options:
1. Roll over the 401(k) account to a personal IRA. Rolling over an old employer 401(k) to a personal IRA is the most common option. There are no tax consequences or penalties for doing so – and depending on the option you choose, the rollover may often be made directly. Your old employer can often supply you with the paperwork needed to complete the transaction.
2. Roll over the account into your new employer’s 401(k) plan. This is also a popular option with one important caveat: Make sure your new employer’s 401(k) plan will allow you to roll over your old 401(k) into the new employer’s plan. There are no penalties or tax consequences. Once the old account’s funds are transferred to the new account, you can invest the monies in the funds available in your new employer’s plan.
3. Liquidate your account at your former employer. This is the least advisable option. If you are under age 59 ½, you will have to pay taxes on the amount you have liquidated and also pay a 10 percent penalty for making an early withdrawal. If you are over 59 ½ you will still pay taxes on the withdrawals.
Where can I find a lost retirement account?
If you think you have an old retirement account floating around with one or several former employers, several free resources can help you locate your account(s):
1. Labor Department, Employee Benefits Security Administration’s Participant and Compliance Outreach, Education and Assistance Program.
www.askebsa.dol.gov : 1-866-444-3272
2. Pension Benefit Guaranty Corp.
www.PBGC.gov : 1-800-400-7242
With all the stress of making a job change, keeping track of an old 401(k) account can be low on your priority list. However, you’ve worked hard to save this money for your golden years and these old retirement accounts are still an important part of your assets. All of your 401(k)s and accounts should be managed and reviewed with your other retirement savings. If you or someone close to you has questions about 401(k) rollover options, the rollover process or simply about finding an old account, please feel free to contact us.