What Should You Do With Your 401(k) When You Leave a Job? | 4 Smart Options Explained

When you leave a job, your 401(k) doesn’t come with you automatically. In this episode, Miguel Gonzalez breaks down your four main options—and how each one affects your taxes, investment strategy, and future growth.

Cortburg Retirement Advisors is a boutique financial planning firm committed to helping you grow, protect, and preserve your assets from your first job to retirement. We specialize in wealth management, estate and tax planning, group retirement, employee benefits, insurance, and retirement planning to navigate any economic climate.

Miguel Gonzalez, a Retirement Specialist with 20+ years of experience, offers expertise in retirement income planning, investment management, and retirement plan design. With an MBA from Columbia Business School, and professional experience with JP Morgan Chase, Merrill Lynch, and more, Miguel is a trusted advisor for his clients.

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Welcome to Cortburg Speaks Retirement Podcast
with Miguel Gonzalez, MBA, AIF®, CPFA®, CRC®

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Transcript

Welcome to Cortburg Speaks Retirement

An audio podcast about investing in the stock market, financial planning, money management and retirement planning.  Each Wednesday, we help investors at all stages of life learn how to potentially grow and preserve their money from first job through retirement.

Now here is your host, Miguel Gonzalez.

Good morning and welcome to the CORTBURG SPEAKS RETIREMENT audio podcast.   

This week, let’s talk about what happens to your 401(k) when you leave a job—and why this decision matters more than you might think.

Whether you’re changing employers, retiring, or starting your own business, your 401(k) doesn’t automatically follow you. You need to decide what to do with those funds. And depending on your choice, it can affect your taxes, investment flexibility, and long-term growth.

Here are your four main options:

1. Leave it in your former employer’s plan
   This may be a convenient option, but it comes with drawbacks. You may have limited investment choices and less access to advice. And over time, it’s easy to lose track of old accounts.
2. Roll it into your new employer’s plan
   If your new job offers a 401(k) and allows rollover services, consolidating can simplify your finances. You’ll also avoid RMDs while you’re still working if you’re contributing to that new plan.
3. Roll it into an IRA
   This option typically provides more investment choices, potentially lower fees, and more control over your withdrawal strategy. It also makes estate planning and beneficiary management easier.
4. Cash it out
   This option is almost always a bad idea. You’ll pay income taxes on the full amount—and if you’re under 59½, a 10% penalty too. Cashing out could cost you a large chunk of your savings.

When evaluating these options, consider your age, your retirement timeline, and your comfort with investment choices. The right decision can help grow your wealth and reduce unnecessary taxes and fees.

In Closing
Your 401(k) represents years of hard work and savings. Treat it with care, and it can continue to serve you well in your next chapter.

This is Miguel Gonzalez, Certified Retirement Counselor (CRC) and Managing Partner, with Cortburg Retirement Advisors signing off for this week’s educational podcast.