401k Rollover

What happens to the money in my employer retirement plan 401k account if I change jobs and leave my current employer?

Account "portability" is one reason why 401k plans are so popular.

Generally, if you decide to change jobs you have three 401k rollover options.

1.	If your vested 401k retirement plan balance is greater than $5,000, you can leave it in your former employer retirement plan 401k until you reach the 401k plan 's normal retirement date (though the 401k plan may allow you to wait until you are 70½).
2.	If you receive a non-periodic 401k distribution, you may directly 401k rollover your vested retirement account balance into another qualified retirement plan or into an IRA. This means your former employer or employer retirement plan administrator must make the 401k distribution check payable directly to your new employer's qualified retirement plan trustee or to your IRA 's custodian on your behalf (so you do not receive the money even temporarily and you can avoid immediate 20% federal income tax withholding as well as the 10% early withdrawal penalty). Click here for more information on IRA Rollover..
3.	You can have a full or partial 401k withdrawal made payable to you (instead of an 401k rollover). This would result in numerous tax implications. The taxable portion of the distribution would be subject to federal income taxes for the year in which it was received, 20% federal income tax withholding and, possibly, a 10% early withdrawal penalty if you are under age 59½. If you want to do 401k early withdrawal before you are age 59½ without paying penalty, you need to do what is called a 72t distribution for 401k early withdrawl. Click here to read about early withdrawal without paying penalty..