What Happens to My 401(k) When I Leave My Employer?

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When you leave your employer, there are three things you can do with your 401(k0 plan:

Leave your savings in your plan, if your employer allows it.

Withdraw the money. If you choose this option, you will owe income tax on the withdrawal and if you are younger than 59.5, you will probably owe a 10 percent penalty.

Roll over your balance into your new employer's 401(k) plan, if the new employer allows it, or roll it into an Individual Retirement Account. If you choose one these options, you won't incur an income tax liability or penalty and your money will continue to grow tax-deferred.

For more, see http://www.401khelpcenter.com/401k_education/distributions.html or

http://wps.fidelity.com/401k/about/leave.htm

 
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