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Do you know your 401(k) options?

Do you know your 401(k) options?

May 16, 2024

 

Between high contribution limits, tax advantages, and potential employer matching, a 401(k) can be a homerun for your retirement savings.

But if you’ve moved on from your 401(k) employer or are planning a transition soon, do you feel prepared to handle your retirement plan? 

Consider these options for managing your 401(k) savings after you leave your employer:

Keep your current 401(k)

Logistically, this is your easiest option. Unfortunately, some employers don’t offer this once you’ve left. It’s best to check with your HR department to understand what’s available.

Rollover to a new 401(k)

If your new employer offers a 401(k) plan, you can likely rollover your existing plan. This will allow you to continue taking advantage of 401(k) benefits like employer matching and high-contribution limits. However, you will be limited in your investment options based on your new employer’s plan.

Rollover to an IRA

If your current employer doesn’t offer a 401(k), you could choose to roll your savings into an individual retirement savings (IRA) account. An IRA offers more flexibility and choice with your investments, but does have a lower yearly contribution limit than a 401(k).

Withdraw your money

If you need extra cash today to cover expenses, you can choose to withdraw funds from your 401(k). Keep in mind, you will pay taxes on your contributions, plus a penalty for early withdrawal. While this might not be financially advantageous, it’s still an option if you need cash immediately.

                                                                                                                                                                                                                                                         

OptionProCon
Keep your current account     No action neededNot allowed by all employers
Rollover to new 401(k)Maintain your tax-advantaged retirement account        Limited by your new employer’s investment options
Rollover to IRAGain more control over your investmentsNo employer matching and lower contribution limits
WithdrawGet cash instantlyWill likely pay penalties

                                                                                                                                                                                                                                                                                                     

Navigating your 401(k) is just the tip of the iceberg in retirement planning—there's a whole world of strategies waiting to empower your future preparations. Just know I’m here to help you with all aspects, from 401(k) to tax management. 

Be well,

Daniel Ruben, MD, MPH, MBA

(818) 483-6611
LSAWealth.com
LSAWealth.com/blog.htm

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P.S. Need help with estate planning, budgeting, or portfolio management? Contact me today and let me know how I can assist you with a customized plan.

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific situation with a qualified tax professional.