What to do with your retirement when you leave a company.

When you leave an employer, one of the many decisions you must make is what to do with your 401k/403b (retirement). Many people forget about this decision – but I want you to make this a mandatory ”to-do” when you separate from an organization. Think through your options and make the best decision for your situation. This video will give you some food for thought.

If you need a financial coach to help you organize your finances, email me at or check out my website for additional information www.achievefc.com. I provide a variety of services to individuals, families, groups, and civic organizations.

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I am a financial coach that focuses on improving personal finance behavior. I do not sell investment products or manage investments.


So you’re leaving your employer Let’s talk about what you need to do With that retirement account [Music] What’s up everyone thank you for Stopping by the achieve financial Coaching channel where we believe in Breaking the chains of debt and talking About all things related to personal Finance my name is kenny simon i am your Personal finance coach and today i want To talk briefly about what to do with Your retirement account when you are Leaving an employer whether you’re Striking out on your own or going to a New employer what do you do with the Funds that you leave there I have a personal opinion on what you Should do but i want to run through a List of things to see if i can convince You that it’s not a very very good idea To leave your money there once you go Somewhere else please subscribe to the Channel like the video drop a comment And share this with some friends let’s Get started So what to do with your retirement when You leave a company first of all let’s Just make sure we have a couple things Straight in general without getting too Fancy you have two options you have what Is called a 401k which is basically a Retirement account that is administered By your employer so when you think 401k

Think my employee my employer my company My organization that i work for outside Of that you have the option of an ira That’s just an individual retirement Account that is administered and Controlled by you of course you have to Sign up with a Brokerage firm like a vanguard or a Fidelity but you control all those Investments and both options the 401k And the ira Have pre-tax and what they call roth Options roth is after tax contributions Has lots of benefits but we can talk About that in a later video okay now That we have an understanding of 401k And your ira those are your options Remember 401k is inside of your employer Ira is outside of your employer you have Three options when you’re leaving a Company and going to a new organization The first thing the first option you Have is to cash it out you can say i Want all of my money i Want to do something with that money so I am going to cash this out but i would Highly recommend you look into your tax Obligations because if you are younger Than 59 and a half you will be hit with A penalty and you will also be hit with Your regular income tax so you lose a Lot of that money i would recommend you Not cash out The next thing you can do is leave it if

You like what your um Soon to be ex employer is offering you Have an option to leave it there now if It’s a certain dollar amount like if It’s a thousand dollars or two thousand Dollars or something like that or less They may force you to to take it but if You have a decent amount over there your You may have the option to leave it There The option that i really like is the Direct rollover it’s when you move it From your old employer uh to somewhere Else and you have two options and when i Say direct rollover i mean you are not Putting your hands necessarily on this Money and doing anything with it um you Want to roll it directly from your old Employer to a new location and you have Two options with those two notifications Two two locations You can roll it to your new employer’s 401k plan that’s an option hey i’m Moving it from my old employer i want to Put it in my new employer’s plan you can Do that i would recommend you do the Direct rollover and try to do it Electronically you don’t have to get in The middle of it of course you have to Do some you know you have to sign up and And do some paperwork and whatnot to Make sure that they have all the account Information correct and they will roll This directly from your old employers

401k Into your new employers 401k or 403b by The way so when i say 401k i’m talking About both of these things The next option in the direct rollover And this one gets the gold star for me This is the one that i like you can roll It from your old employer into an Individual retirement account or an ira That will give you a lot more control Over some things and we’ll talk about This here in a second but i really like The option of a direct rollover from my Old employer to an ira and they may do That electronically as well sometimes They’ll mail a check Directly to you and then you have to Take the steps to roll it over but Nonetheless out of these options i like A direct rollover and specifically i Like a direct rollover to an ira okay so Why do i like the direct rollover to an Ira Here is why i like it first of all If you don’t do a direct rollover and You leave your money in your old Employer’s 401k you may forget it i have Actually coached clients and i’ve asked Questions about did they have a Retirement account at their old employer And some said yeah i did and they Actually had forgotten that they had Money over there i don’t care how small The amount it’s yours go get it

Secondly Um You may have less control Over You know your investment options and all Of those things when you leave your Money in your old employers 401k 401ks Tend to have limited options some are Very good but some have limited Investment options so you just have less Control you roll it over to an ira you Will have much more flexibility in terms Of what you can invest in it will Definitely be much broader than what Your 401k offers And then the third reason is higher fees Your Actively managed 401k program will Probably have higher fees than an ira Through of a brokerage firm like Fidelity or vanguard or charles schwab You should look into what the fees are They should clearly be telling you what They’re charging you inside of your 401k And compare that to a discount brokerage Houses fees but you may be paying higher Fees if you do not roll this over into An ira The fourth reason i like this is You need to consolidate All of your retirements having a little Bit of retirement here a little bit of It there That just makes

You know for a difficult job in managing Your retirement consolidate it all into A nice ira all of your money is in one Place you can control all of the Investments and all of those things but I recommend not having bits and pieces Of retirement plans all over the place When you leave a company bring your Money with you put it into an ira of Your choice but that gives you much more Control and then you have all your money In one place to um Work on what you want to invest in with Your retirement and the fifth reason That i really like it’s a little bit Quote unquote advanced But if you put your money into an ira You will have the option to do what is Called a backdoor roth and we’ll make a Video about that in the future but the Backdoor ross allows you to sort of move Some money from the pre-taxed ira Into A roth account which then grows tax free And so i am personally doing that um and I like the back door roth options there Are tax implications so you really Should research it and look into it but Having your money in an ira gives you an Option to do a back door roth if your New employer or your old employer did Not offer a roth 401k option i hope the Information presented gave you something To think about whether you’re in this

Situation right now or even if you face It in the future i’m not a big fan of Leaving my money at previous employers In fact every employer that i have left I have taken the steps necessary to Remove that money from that ex that 401k Into my vanguard ira that makes me feel Much better all of my money is now in One location and i have much more Control over the things i invest in and How i allocate those funds and of course I have a much broader option to choose From through vanguard than i did any of My previous employers so that is what i Would recommend i am also taking the Steps to take advantage of some Tax-free growth so i’ve actually started Using pieces of my ra and sliding that Into a back door roth because i want Some tax-free growth when i retire i Want to be able to draw some money and The government doesn’t charge me taxes For it and so that is my personal Philosophy those are some things that i Am doing i am not a big fan of leaving Your money with your old employer so Think on these things Remember this you can achieve much Greater things than where you are today If you’re willing to put in the work Conceive it believe it and achieve it I’ll see you on the next video i hope Today’s video gave you something to Think about as you continue your journey

In managing your personal finances i am Hoping that you are actively managing Your personal finances and not just Letting it happen to you but if you Think this video was helpful share it With some friends definitely hit that Like button subscribe to the channel and I’ll try to keep dropping more content For you as we move forward see you on The next video

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