What are my options in moving my 401k?

Question

I will be leaving my job soon and moving to another state. Since I will be quitting, I will need to move my 401k. What are my best options to preserve the money I've saved there over the years and minimize any possible loss?

Answer 1

If you like the current company managing your funds, roll it over into their IRA (Individual Retirement Account). No taxes or penalties.

If you like the current company managing your funds, roll it over into a Roth IRA. You will be taxed now, but not when you withdraw the funds at retirement. No penalties.

If you do not like the company managing your funds, you can roll it over to another company (ie, with your new job). You have your choice of a 401(k), IRA (no taxes or penalties) or Roth IRA (no penalties).

Or you can cash it out. This is a bad move, since you would be taxed and penalized for early withdrawal.

When I left my first company, I rolled my Fidelity 401(k) over into an IRA with Fidelity and kept the same mutual funds.

Answer 2

You don't have to move it, unless your ex-employer forces you to move it. So if possible, leave it as is till you find another job that offers a 401k, then transfer your money over.
If your employer requires you to move funds and you haven't opened another 401k, roll it over to an IRA (example: companies may give you 2 months to roll or transfer your funds before they force you to 'cash out').
What ever you do, don't cash it out. You're subject to taxes, possible IRS penalties as well as surrender charges.