What To Do With Your 401k From Your Old Job

So if you are watching this video, you probably have some questions about your 401k and what to do once you leave your job, and what are the options and consequences.

First thing is first, you do not want to liquidate it and sell it everything, that would be done, because if you are to young, you will most likely take a massive penalty.

Number 4 Is my favorite

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Cash Out is Option but Should be Avoided

So as you should know

A 401k is pre tax account

So you get to invest your money without paying taxes

But eventually you will have to pay taxes obivoulsy



So if you have let’s say 50k In your 401k and you want to take it out

If you are not 59 and half or didn’t stop working for that employer before the age of 55,y ou will be hit with an early withdrawal penalty )

So here is a picture I found on the fidelity website while doing research

You get left with only $29,500, which is insane



Roll it over into a Traditional IRA

You can do for free

and now you can pick from a wider range of investments

plus if you are under 59 and half you can use a portion of your money for buying your first home or higher education expenses



the problem is though:

you will have RDM ( Rquiered minimum mandory withdrawal ) once you reach 73

bascially means you will have to take money out

and since an Traditional IRA is also a pre tax account, you will have to pay taxes



Roll it over into your new employers plan

So this is a very simple one to do

Its rolling it from your old to your new

Some emplyer allow it and others don’t, so you have to check and see



Benefits:

401k if you continue to work, you can wave the RMD

You have more protections from creditor with a 401k

And you can contrinue to allow the money to grow tax free



Roth Ira Ladder

This is my favorite

But its expensive and it cost money

But the benefit will be long term



Here is what you do:

You roll your old 401k into a traditional ira

Then roll over in chunks the money into a roth ira



The benefit:

You’re money will grow tax free

You will not be tax when you take the money out

And they also don’t require rdm


Cons:

You’ll have to pay taxes on the money you roll over

Because you’re moving it from pretax to after tax retirement account

But you’ll need those benefits later not now



Do nothing

Some people chose not to anything

And if the employer has high fees that’s a problem

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I'm an Accountant but I'm not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

[dorothyquinones]

#4 for sure ! I needed this info now as I'm transferring jobs. Thank you for the information

[TheManInBush]

#4 all the way and you did a great job explaining the difference between ira vs roth

[CENA]

I'm in a very similar process now my employer just offered roth 401k I just finished converting the pretax contributions to roth and now I'm going to be converting my employer match to roth my employer said on the plan it's allowed and I'm already fully vested one day if I decide to leave my job I will move the roth 401k to roth ira which I already have with little to no tax thanks for the video I just shared it to some people that always ask me about investing

[rinakatofficial]

I didn't know I needed this video

[jeffreyb.]

Is it better so move my 403B to a Traditional IRA or a Rollover IRA?

[zenkaishogun]

Hey Tommy how do you find a 401k if you've retired? I'm trying to help an older family member

[ButtmanAtHeart]

I don’t care what anyone says… taxation is theft