How to roll over your 401(k)

Pro:

✅ Immediate access to your money

Cons:

❌ Money not available for future retirement needs

❌ May be subject to 20% federal income tax rate

❌ May be subject to 10% federal tax for early withdrawals before age 59½

❌ May be subject to state and local taxes

2. Leave them in your old employer’s retirement plan

Pros:

✅ Retirement investment continues to grow

✅ Tax-deferred until withdrawal

Cons:

❌ Cannot make additional contributions

❌ Subject to different rules than your new employer’s retirement plan

❌ Investment options limited by old employer

❌ Tax penalty for early withdrawals before age 59½

Pros:

✅ Can continue to make new contributions

✅ Ability to manage rolled-over money and new contributions collectively

✅ Tax-deferred until withdrawal

Cons:

❌ Investment options limited by new employer

❌ Tax penalty for early withdrawals before age 59½

Pros:

✅ Not restricted by your employer’s retirement plan

✅ Tax-deferred until withdrawal

✅ Direct rollovers from 401(k) to IRA will not incur federal income tax

Cons:

❌ Account fees may be higher than employer-sponsored plan

❌ Tax penalty for early withdrawals before age 59½

❌ Indirect rollovers may incur 20% federal income tax