If you had multiple jobs and multiple employers and took advantage of a 401K (if they offered one), then you likely have multiple 401K accounts. First of all, just because they’re retirement accounts doesn’t mean that you should forget about them. If you’re in this situation, your old 401K probably wasn’t on your mind when you left for another job. If you had another job lined up, you might have been focusing on leaving your current job on a good note. You might have been focusing on your new job and working your butt off because you’re new.
One thing is for sure, you’re 401K is your money. It belongs to you and you should put attention on it as if it was your checking or savings accounts. Managing multiple 401K accounts is a hassle. Having too many accounts can get disorganized and sometimes forgotten.
You have a few options to consider handling old 401K’s.
- Rollover your old 401K to your new employer’s 401K. Typically, it’s a matter of submitting a form with the account information.
- Rollover your 401K to an IRA. This also is done with paperwork and providing account information.
- Withdraw your 401K as if you are taking the money out. This poses an early withdraw penalty because you’re withdrawing prior to retirement age.
- Leave it where it’s at. You might like your 401K broker and decide to do nothing with your 401K. No contributions will be added to it but it will continue to be invested with your broker.
There is a difference between a rollover and withdrawing your 401K. A rollover is a direct transfer from one broker to another. It is not considered a withdraw because you are transferring it from one retirement account to another. You are not penalized. A withdraw, on the other hand, is taking the money out and taking possession of it which will incur a penalty even if you plan to deposit it into another retirement account. Don’t get mixed up between the two because of the penalty factor.
There could be a number of reasons why you might have multiple 401K accounts. One reason, and I’m guilty of this, is because of laziness. It’s a hassle filling out forms out of your busy day. Another reason is that it’s not a priority. You’re working hard at your new job and you’re not focused on your previous 401K. 401K is for retirement, why bother with it right now? A question you might be asking yourself.
Bottom line is that it’s your money! You’ve earned it and it’s a financial tool you can use. I’ve had multiple 401K accounts scattered with different brokers. Back then I had to fax my forms in. It was even more of a hassle trying to find a fax machine. Nevertheless, I’m glad that I consolidated my retirement accounts into an IRA. It’s allowed me to see my investments from one broker account and see the totality of my investments.
Your 401K is a future financial tool and shouldn’t be forgotten because it’ll continue to grow without you even realizing. I’ve maximized my 401K since my first job and it’s definitely a tool I’m planning to use. If you are interested in following my journey, email subscribe to get alerts of latest posts or follow me on Facebook.