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What to do with your 401k when you change jobs

((AMY ON CAM))
I’m Amy Wagner with your Allworth advice. Are you changing jobs and need to know what to do with your 401k?

((TAKE PKG))
Many people are changing jobs these days, and that can lead to the question: what should I do with my 401k from my old job? You have several options. If your new employer offers a 401k, you can roll it over to the new plan. There’s no penalty to do that and it’s very easy to do. Other options include rolling the money over to an I-R-A. This is a tax-advantaged retirement account, but your employer wouldn’t manage the account, you would. You could add it to an existing I-R-A where you’ve already directed how you want your money invested. This is done sometimes when a company doesn’t offer many options for how your money is invested. You might be sent a check if you do this…just make sure to deposit it with the institution holding your I-R-A within 60 days. You can also roll your 401k into a Roth I-R-A. Remember…with this option…you will need to pay taxes on the entire balance in the year that you do the rollover. And sometimes the best plan is to leave the money with the old employer. You can’t continue making contributions, but it may be a better plan.

((AMY ON CAM))
Here’s the Allworth advice: what NOT to do with it is pretty simple…don’t cash it. If you cash it out and put the money into your checking account, you will probably be hit with a penalty from the I-R-S. It will also increase your federal taxes next year. With your Allworth advice, I’m Amy Wagner.

allworthfinancial.com