what happens to a 401k account when you decide to leave a company?

Question

how easy is it for the company to just keep the money? I am about to leave a company and have no idea how to handle this. Its not a lot of money, but i swear in the past i've had 401ks' with other companies and never heard about it after i've left. is there a way to check about old accounts? would i be better off managing my own IRA or what? please help

Answer 1

The company is obligated to keep the 401K account in your name until you contact that financial entity to instruct them on how to disburse it. You can keep 401K's with past companies for years. You should, however, keep track of any statements you receive from that financial entity, so that when you are ready to make a change, you will have the correct information to do so (account number, contact info, etc.). The best and easiest thing to do is probably establish a relationship with a financial advisor and have them assist you in determining the best option for your old 401K. You can have that $$ rolled over into an IRA or other account, so long as it is done correctly and never actually comes to you. Be careful, though, because if you have the 401K simply liquidated and disbursed to you, you will be liable for taxes on any earnings generated since establishing the 401K, as well as penalties for early withdrawal (you are not supposed to use a 401K before retirement age, unless you have a qualified expense such as a child's college education or medical emergencies).

Answer 2

When you leave, it's up to the company to decide if they will let you keep the account. Many (?) employers will let you keep the 401(k) as long as you have over a certain amount (say $5000).

Some will let you keep it, but you need to pay account fees.

Others will require you to roll-over to an IRA or another employer's 401(k).

The last option is typically the best, unless you have a specific reason for doing something else (e.g., your 401(k) is offering you a great investment that you can't get elsewhere). An IRA is going to give you the most control and flexibility.

The company cannot keep your money. So, if you've left former employers and never heard from them again about your 401(k), you need to find out why.

If you rollover, make sure to follow the rules for doing so. Making a mistake can cost in terms of taxes and IRS penalties.

Your IRA company or your old employer's fund manager should be able to assist with a rollover.

Answer 3

You can either leave the money where it is (if the company allows it), or roll over into another retirement account, which could be a 401k at your new job or a personal IRA account, or withdraw the money and pay taxes & penalties on it.

The money in 401k is *your* money, and the company can't just keep it. They can only take away a portion of their own contributions, if they made such, which wasn't vested yet. Treat this account as another bank or brokerage account (call them and demand your money or a statement, threaten to sue if you have to, etc.) If they send you a check, you'll have 60 days I believe to put it into another retirement account without owing any taxes or penalties.

Answer 4

A 401k is something that you put part of your paycheck into and possibly the employer matches part of your contribution.

100% of the money you put in is yours and you should be able to roll it over into an IRA or transfer it to your new jobs 401k without any undue delay. If your employer contributes, there will be a vesting schedule (meaning you will get a percentage of their contribution based on how many years you were at the company.)

Some people are given the option of keeping the 401k with the old employer, but personally I like rolling it into my own IRA.

I am not recommending a type of investment but if you check out:
https://flagship.vanguard.com/VGApp/hnw/FundsByType

They can explain how to roll a 401k over into an IRA.

No matter what you do, do not take the cash as a lump sum unless you are of retirement age. The taxes you will pay are astronomical if you cash out of a 401k early.

Answer 5

You have a decision to make. Do you keep the IRA and transfer it to another account or accept a check? I would not accept a check, the early out penalties are massive for the tax man, I believe 30%. You can transfer it to another account at the new company. I believe you have 30 days to do this. You can create your own IRA and transfer it, but do not accept a check. Even if you place the funds in another IRA, if you accept the check, it is like cash and your old company must take out the tax. They have to do an IRA to IRA transfer to keep all the funds in the account. Hope that helps.

Answer 6

trust me..they don't want to just keep it. To get the funds all you have to do is fill out the distribution form. The company's HR person will have one or they may direct you to go online and print one out.

The way to check on old accounts is to contact that employer. They will not go out of their way to find you but they will pay you if you find them.

Every company reported to the Social Security Office that they have an account for you...when you turn 65 the Social Security office will send you a form letter for each company letting you know that it's there...It's never a good idea to let it sit that long though.

And if you have multiple 401k's like that it's much easier for you to track if you roll it into a single IRA. Create a form letter for each company asking them about taking a distribution and having them provide you with the necessary forms. Then roll away!!!

Answer 7

It depends on whether or not you're fully vested. Find out what financial company manages your company's 401K fund and contact them, they would ultimately be the ones to handle the distribution, not the company you work for. Your company should have information related to how their 401K program works, I would ask them for this info and do the research.

In order to avoid tax penalties you DO have to roll over either into another 401K program or an IRA. Otherwise you'll pay tax on the $$ paid out AND a penalty. Not worth it, believe me.
Good luck.

Answer 8

I've done this twice. The money is yours, or whatever the amount that is vested to you. In Both cases I rolled it over to a self directed IRA account. One of them I converted to a Roth. I don't recall how long I waited to this, but you shouldn't have to wait anytime, the money is yours. I use Ameritrade and I called them and they helped set everything up. So my suggestion to you is find a financial institution you are comfortable with and give them a call. They will help in the the Roll over process. You should be able to go those previous companies where you were employed and possible roll them all over to the same account.

I wish you the best of luck!

Answer 9

Ask the company to do a direct rollover into a IRA.

You can set up the IRA at a bank, mutual fund or brokerage house. If you don't want any tax implications at this time choose a conventional IRA over a Roth.

Answer 10

you company is not holding the 401k, another company is, you can go to any firm, like Vanguard, and they will take care of all of the work for you,

and yea, tell your new brooker that these exist and he will search it out for you

no offence but if you are asking these question, have a pro help you out a good pro will make more money for you then you could do alone