The Impact of Leaving Your 401k at Your Previous Company

Are you doing damage by leaving your old 401(k) at your old employer? There are 3 questions you need to ask yourself.
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Mike Bernard, CFP® offers advisory services through KFG Wealth Management, LLC dba Korhorn Financial Group. This information is for general financial education and is not intended to provide specific investment advice or recommendations. All investing and investment strategies involve risk, including the potential loss of principal. Asset allocation & diversification do not ensure a profit or prevent a loss in a declining market. Past performance is not a guarantee of future results.
Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.

[@RobertDamanii]

As it stands, I think it’s about time I consult a financial advisor on this

[@straitjacketstudios]

You left off the rule of 55. This is a critical decision point if you should move your old 401(k) or not. This could result in up to five years of penalty, free withdrawals prior to 59 1/2 but in most cases, you cannot move the 401(k) out to access this rule.

[@WiseMoneyShow]

If you terminated from that company prior to the year you turn age 55, then you wouldn’t be eligible to draw from that old 401(k) once you turn 55 penalty free. That’s an often overlooked requirement.

[@straitjacketstudios]

@@WiseMoneyShow Indeed. But I am talking about those that have reached 55. Those should not rush out and roll over their 401k without checking first.

[@RobertDamanii]

I'm considering cashing out my 401(k) to pay off debt. Has anyone else done this?

[@RoseBalerus]

Be careful, there are penalties for early withdrawal before age 59 1/2! And probably pay withdrawal tax during withdrawal

[@RobertDamanii]

But what if I really need the money? Are there any exceptions to the penalties?

[@RoseBalerus]

if your new company's 401(k) has better investment options and lower fees, that might be a good choice I think

[@JasonAmir-qo4uo]

Actually I think withdrawal money before age 59 1/2, you may be subject to a 10% penalty tax, in addition to income tax.

[@OwenFlex]

I’ll suggest if you have company stock in your 401(k), you may be able to use the NUA rule to reduce taxes on withdrawal.