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I know it’s not as fun as bingeing something on Netflix, but it’s a good idea to throw yourself into understanding your finances. You can Google lists of the best books on finances. Some popular titles are “The millionaire next door” , “Your Money or Your Life” or any number of titles by Susie Orman. You can do it in a weekend and then you’ll know. That knowledge will serve you for years. Then we will be asking you for advice.
The answer is definitively no - unless you transfer it yourself. It's entirely on you to do, and you don't need to. Your old 401k will not get any new contributions, but the money you have already put in will gain or lose value based on regular market conditions.
If you transfer it over you'll be able to allocate the money into the funds of your new 401k
Yes but you have to call them and arrange for the money to be transferred into your new company’s provider
You don’t have to move it to your new plan. You can roll it into a traditional IRA with any investment bank like Fidelity or even the bank that holds it now. You are free to remove it from the confines of a corporation as intermediary. and manage on your own or have access to their advisors. You will then have all options available to you to invest that money mutual funds, ETFs Stocks bonds etc.. company plans are very limited and fees are higher. It is your money.
Then, start a new 401k with new company and do the Roth if they offer it. Just make sure you do it all by the rules/timing. It is worth gaining knowledge now.
Lastly: you may want to open your own account that is specifically called a Rollover IRA, and keep this money separate from your traditional IRA (if you have one). This should ultimately make it easier for tax purposes and come retirement tume to not have these commingled. Any future jobs 401ks get rolled over into your Rollover IRA each time you leave a company (which you never contribute to otherwise) and your traditional IRA is where you do contribute on your own. That’s what I do but probably best to talk to a tax/financial adviser. Honestly I can’t even remember why it’s a good idea but makes it easier to separate out tax deductible years and interest earnings I think. Aargh this is why I’m a writer and not a CPA.
Also, if you’re relatively young and plant to make more money later in your career, do a Roth IRA if you can.
Traditional ira is a tax deduction now, uses pre tax dollars now (when part of a 401k) but is taxable later when you use it.
Roth is not deductible now, is taxed now, but is not taxed later when you use it.
So a Roth feels more expensive now, but is a better long term deal if you are running up against tax burdens/are rich. Financial planners of the wealthy recommend moving assets to a Roth as part of a longer term tax strategy (you pay tax now on any money you convert to Roth, so smart to do while you are in a lower bracket rather than pay it later, but again, that makes it feel expensive now).
Also, Roth has income limits, meaning you can’t put as much in once you are paid around 200k. So it gets harder to take advantage of the perks just when you start to be paid enough to start thinking like a long term investor and not a month to month bill payer.
In the long run it will definitely pay to move your money as you do so it’s all in one place. Way easier than having to remember where you have money holed up
Also absolutely yes to Roth IRA esp if you are younger, pay the tax now and then that dough is earning tax free for decades AND when you withdraw it.
The money you put in your 401k is absolutely yours. The current company managing it will want to keep it if it’s a decent amount (meaning they will not contact you offering to roll it over or automatically send you a payout check - and when you call to roll it over they will hard sell you to leave it with them), or, conversely, they will make you move it if it’s paltry. They will definitely give you this info at at exit interview. I usually “roll it over” into an IRA I hold separately from work ones, but you can also roll it into your new company. You have to, at the next tax time, show that you rolled it, though, since if you get that check and cash it you have to pay taxes on it. If you roll it over it remains tax deferred.
Now, the money your company puts in as a “match?” That you may not get to keep any, keep some of, or keep all of, based on your company’s vesting schedule and your time employed relative to that. Many firms give you full vesting after 3-5 years. Some do partial vesting. It does not matter if you roll it over or leave it there- you stop vesting on the last day of employment.
With the wildly fluctuating market you may want to roll over in increments instead of all at once. That way if the market drops significantly on the day you roll you wont be hit with a huge loss. I speak from experience...
Most 401ks have an age-based investing. Basically the younger you are, the more risk you can tolerate. As you age, they move your money to safer investments. (I’m talking easy down the line.) I’ve always done some version of this and my 401k has over a million (I’m old). And ALWAYS CONTRIBUTE THE MAX.
Also depends how much you are vested. After 3 or 4 years you can also keep whatever the company had matched to that point. So short answer is yes , what ever you contributed is yours and you can roll over that over the new employer’s plan.
Keep contributing, (the max if u are able) it is worth it.
I'm just going through the this now too after realizing I have 4 401ks from past companies floating out there.
I made appointments at a few Banks to talk to their advisors about what made sense for me to with goal of rolling over my accounts into a single one independent of an employer. I decided to go with Bank of America/Merril Lynch as my Rollover IRA is going to be managed and invested based on my personal goals and needs vs an Employer group objective.
It can be super overwhelming, but do the rollover since it will help you know where all your finances are but also have that money be invested with you in mind.
Commenting for more updates on this thread.
Ditto