What to do with an Old 401(k): Key Options and Decisions | Learn

Old 401(k)

Changing jobs is a common part of modern professional life, and it often comes with a host of financial decisions to consider. One pivotal question is “What should I do with my old 401(k)?”. Employers typically offer employee-sponsored retirement plans like 401(k)s as part of their benefits package. This retirement benefit requires careful consideration when transitioning between positions.

Left unattended, these can be forgotten and left to accumulate fees while offering limited growth opportunities. Let's explore the primary options for your old 401(k).

Options for Managing Your Previous Job's 401(k)

Staying with Your Old Employer’s 401(k) Plan

Leaving your old 401(k) with your previous employer is an option. Generally, if your account balance exceeds a certain minimum amount, often around $5,000, you can choose to keep your funds where they are. However, this approach does have its downsides. While your funds will continue to grow tax-deferred, your investment options are limited. Additionally, you may still have to pay administrative fees and you won't be able to make new contributions, limiting the potential for growth.

Merging into Your New Job’s 401(k)

If your new job also offers a 401(k) plan, rolling over your old 401(k) could be an option, but do your research. Taking this step binds your hard-earned previous savings to your current employer's investment choices, which often come with restrictive options or inflated administrative fees.

Taking a Distribution from Your Old 401(k): Think Twice Before Cashing Out

While you can certainly opt to take a distribution from your old 401(k), be aware of potential drawbacks. By cashing out, you may face immediate tax penalties, lose out on potential growth, and compromise the long-term value of your retirement savings

Considering a 401(k) to IRA Rollover

Rolling over your old 401(k) into an Individual Retirement Account (IRA) often provides the most flexibility. IRAs usually offer a wider range of investment options compared to 401(k) plans, and they often come with lower fees. Plus, a rollover does not create a taxable event, ensuring that you won’t lose a portion of your savings to taxes.

Why Choose iTrustCapital for Your 401(k) to IRA Rollover?

If the IRA rollover option appeals to you, platforms like iTrustCapital can help streamline the process. Specializing in self-directed IRAs, iTrustCapital offers a diverse range of investment options including cryptocurrencies and precious metals. With no rollover, annual, or administrative fees, optimizing the growth of your retirement savings has never been easier.

Interested to learn more about 401(k)’s? Read more below.

What is a 401(k)?

Ready to optimize your old 401(k) with an IRA rollover? Start with iTrustCapital today!

DISCLAIMER

This article is for information purposes only. It does not constitute investment advice in any way. It does not constitute an offer to sell or a solicitation of an offer to buy or sell any cryptocurrency or security or to participate in any investment strategy.

iTrust Capital is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager, or adviser in the United States or elsewhere. iTrustCapital is not affiliated with and does not endorse any particular cryptocurrency, precious metal, or investment strategy.

Cryptocurrencies are a speculative investment with risk of loss. Precious metals are a speculative investment with risk of loss. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Clients do not receive a choice of custody partner. The self-directed purchase and sale of cryptocurrency through a cryptocurrency IRA have not been endorsed by the IRS or any regulatory agency. Historical performance is no guarantee of future results.

Some taxes and conditions may apply depending on the type of IRA account. Investors assume the risk of all purchase and sale decisions. iTrust Capital makes no guarantee or representation regarding investors’ ability to profit from any transaction or the tax implications of any transaction. iTrust Capital does not provide legal, investment or tax advice. Consult a qualified legal, investment, or tax professional.

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