About 1 in 5 U.S. workers have left behind or forgotten 401(k)s, according to a study by Capitalize. https://lnkd.in/gjS8zbtN
People are job-hopping at record numbers, and with that an estimated ~$2.1 trillion is sitting in old retirement accounts.
So what can you do with these old accounts?
1) You Can Roll It Into Your New 401(k), 403(b), etc.
Transfer the money into your current employer’s retirement plan (no tax penalties). This simplifies your accounts into one place. The con is if your current employer 401(k) has high fees and not great investment options.
2) You Can Roll It Into An IRA
Transfer the money tax-free into an IRA (no tax penalties). The main difference is that it is an individual retirement account vs an employer sponsored one. Typically offers more investment options and potentially lower fees than a 401(k).
3) You Can Keep It Where It Is
Probably not the best option. You could forget about it and you are likely still getting charged high fees on it.
4) You Can Cash It Out
Not really recommended either, but they do allow cashing it as an option. The distribution is subject to ordinary income tax plus a 10% penalty if you are under age 59 ½ (unless an exception applies).
