If you're like the average full-time
U.S. worker, you'll change jobs 11 times in your lifetime.
Fortunately, your
401(k)
assets — both contributions and earnings
— are portable. That means you can move them when
you leave your job. Portability is one of the benefits of
having your retirement funds in a 401(k) as opposed to a
traditional
pension,
which is tied to the employer that
offers it.
You also have a great deal of flexibility
when you do make a move. For instance, you may be able to
roll over your 401(k) into your new employer's plan, invest
your 401(k) assets in an
IRA
of your choosing, or even take
a cash distribution. But it's important to weigh all your
options and understand all the rules when moving your 401(k)
assets, to be sure you neither miss the chance to make the
choice that's best for you nor unexpectedly end up owing
the government money. That's because there are time limits
for making the move, and tax consequences if you get it
wrong.
If you've been participating in a 401(k) plan at work and are leaving the job, the law requires your employer to give you written information about all of your options for handling your assets. You also get at least 30 days to make a decision.
