1. Leave it in your old employer’s 401(k)
You can typically leave your money in your old employer’s 401(k) after you leave your job. You can’t make additional contributions to your retirement account, but you’ll still be allowed to manage your money.
Generally, keeping your 401(k) money with your former employer is a decent option if the fees are low, you’re satisfied with your investment options, and you don’t mind monitoring multiple investment accounts.
One exception: If you have less than $7,000 in the account, your company can automatically boot you out of its employee investment fund if the plan has a force-out provision. (Previously, employers could exercise the force-out provision only if you had less than $5,000 in your 401(k), but the threshold increased to $7,000 under new Secure Act 2.0 rules that took effect in 2024.)
If the balance is between $1,000 and $7,000, the employer can roll it over into what’s known as a safe harbor IRA. Your money will typically be placed in ultra-conservative investments, plus you may pay a monthly fee, which translates to limited growth.
If your balance is less than $1,000, your old company could cut you a check. In that case, you could be on the hook for taxes and early withdrawal penalties.
