The number of Americans who stay in the same job for their entire career has been steadily declining for some time now.

Most people will have several employers throughout their career, and that means having extra retirement accounts lying around. The basic options are to keep the money in your former employer's plan, roll it over into a self-directed IRA, or to cash out. Which is best for you?

Why not just leave the money where it is?
While it's not necessarily a bad choice, leaving the money in your former employer's plan eliminates options. Generally, employer-sponsored retirement plans offer a list of funds to choose from, and usually include things like various U.S. stock index funds, bond funds, and global funds. The employee is then allowed to designate the percentage of their account that they want allocated to each fund.

The main reason in favor of leaving the money alone is that it's the easiest option. Through no effort on your part, your invested money (hopefully) grows until you reach retirement age. However, if your goal is to maximize returns, the next option may be the way to go.

Roll it over
Within a few months after leaving employment, you should have the option to roll your account over into an IRA at a financial institute of your choosing. The brokerage that runs your employer's plan usually won't advertise this option of course; they want you to leave it with them and generate fees and commissions, so you may need to take some initiative and call your account representative.

The best reason for rolling your money over is the sheer amount of investment options it creates.  You can buy individual stocks, mutual funds, bonds, and even futures and options in many cases. If you see a good opportunity in the market, you are free to take full advantage. Another perk is that many brokerages offer incentives such as free trades or even free money to roll over your account.

Take the money and run?
It may be tempting to cash out your 401(k), but this is rarely a good option. You will almost certainly get hit with some kind of early withdrawal penalty, not to mention the tax hit you'll suffer as a result of cashing out early.

I say that it is "rarely" a good option, because there are some hardship situations where it is OK to withdraw from your retirement account that can be done tax- and penalty-free.

Of course, if you eventually find yourself in a personal financial crisis and needing the money, it is always nice to know that it is there as a safety net, just in case.

So, which is right for you?
The first two options are the best choices for the vast majority of circumstances. If you enjoy following the markets, researching investments, and having the freedom to choose exactly how your money is being put to work, rolling over into a self-directed IRA will provide you with the most potential for profits. If you'd rather not be bothered with it, and are content just letting your money grow along with various stock and bond indices, there is absolutely nothing wrong with leaving your account where it is as long as your employer allows it.

The most important thing that works in your favor when investing for retirement is time. In other words, the longer you leave your money invested, the more that should be there when all is said and done. Don't cash out unless you absolutely need to, and you'll thank yourself when you're ready to leave the working world for good.

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