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Leaving a Job?
What About Your Retirement Account?
For many people the money in your 401(k) is the largest pool of accumulated wealth you have. One of the biggest decisions you must make is what to do with your 401(k) funds when you change jobs.
What’s Mine is Mine…or is it?
When you prepare to leave a job, contact your HR department to determine how much of your retirement plan is “vested.” Vesting simply means the percent of funds that your employer has contributed to your retirement plan that actually belongs to you.
The vesting period can typically extend over a few years, at which point you become 100% vested and all the employer contributions to your plan are now yours for the taking. If you leave your employer’s plan before you’re fully vested, you may lose the “free” money you would have received if you stayed until you were fully vested.
What are My Options?
Now that you know how much you’re entitled to receive from your plan, what are your options?
Simply put, you have four choices:
- Cash out, take the money and run
- Leave the money behind in your previous employer’s 401(k) plan
- Move it to your new employer’s 401(k) plan
- Put those dollars in an Individual Retirement Account (IRA)
You should explore each option before you make a decision.
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