What Happens to Your 401k When You Change or Quit Your Job?
#401k #JobChange #RetirementSavings
#katie_st_ores
Creative Cloud https://www.adobe.com/?sdid=49F59KY6
Welcome back to Deep Dive with Katie St Ores! Changing jobs is a significant life event – new opportunities, new challenges, maybe even a new commute! But amidst all the transition, there’s a crucial financial question that comes up: What exactly happens to your 401(k) when you leave your employer? Does it stay put? Do you get a check? What are your options, and how do you make the right choice for your financial future?
In this episode, Katie St Ores, CFP®, takes a deep dive into navigating your 401(k) during a job transition. It’s a topic that can feel complicated, but understanding your choices is absolutely essential to protecting and growing your retirement nest egg.
We'll start by clarifying a fundamental point: the money you contribute to your 401(k) is always yours, 100% vested from day one. However, employer contributions often follow a vesting schedule, meaning you earn full ownership over time. Katie will explain cliff vesting and graded vesting so you know how to figure out exactly how much of your 401(k) balance belongs to you immediately when you leave your job. Don't leave free money on the table by misunderstanding your vesting!
Once you know your vested balance, you have a few key options, and we'll break down each one:
Leaving the Money in Your Old Employer's 401(k): Is this a "set it and forget it" move, or could it create headaches down the line? We'll look at the pros and cons, including minimum balance requirements and how this affects keeping track of your overall retirement picture.
Rolling it Over into Your New Employer's 401(k): Discover how consolidating your retirement savings can simplify your financial life and when this is a smart move. We'll discuss integrating your old savings with your new contributions and investment options.
Rolling it Over into an Individual Retirement Account (IRA): Explore the flexibility and potentially wider investment choices an IRA offers. Katie will guide you through what's involved in opening an IRA and initiating a rollover, as well as important considerations like managing your own investments and understanding the "pro-rata" rule if you have both pre-tax and after-tax savings.
Cashing Out Your 401(k): We’ll explain why this option is almost always detrimental to your long-term financial health. Learn about the significant taxes and penalties you'll likely face, and the severe impact cashing out can have on your ability to retire comfortably. While exceptions exist for early withdrawals, understanding the consequences is crucial.
Join Katie St Ores for this essential Deep Dive episode to get clear, actionable steps for handling your 401k when your job situation changes. Empower yourself with the knowledge to make the best choices for your financial future!
If you found this video helpful, please give it a thumbs up, subscribe to the channel for more Deep Dive episodes, and share it with friends, family, or colleagues who might be navigating a job change!
Disclaimer: This video is for informational purposes only and should not be considered financial advice. Consult with a qualified financial advisor before making any investment decisions.
Additional Podcasts:
Your 401k After Quitting: What You NEED to Do (Don't Make This Mistake!)
Job Change & Your 401k: Roll Over? Leave It? Cash Out? Explained for Beginners
Deep Dive: Handling Your 401k When Changing Jobs - A Simple Guide
What to Do with Your Old 401k: Options After Leaving Your Employer
18 分
18 分