If you're on a Galaxy Fold, consider unfolding your phone or viewing it in full screen to best optimize your experience.
Maurie Backman is a personal finance writer who covers topics ranging from Social Security to credit cards to mortgages to REITs. She also has an editing background and appears on live podcasts to talk about financial matters.
Many companies offer their employees the benefit of a 401(k) plan. And funding one of these accounts can be crucial if your goal is to live comfortably in retirement.
But at some point, your company might decide to close down, whether because the owners want to retire or because it's no longer cost-effective to keep the business open. In that case, you'll clearly be out of a job. But what about your 401(k)?
Once your company goes out of business, the money you have in your 401(k) will stay where it is until your employer's retirement plan is terminated -- which is likely to happen shortly after the official closing date of your company. But that doesn't mean you have to worry about losing out on your 401(k) balance.
The money you contributed to your 401(k) plan is yours for retirement. So if your old 401(k) plan is being terminated following your company's closure, you'll have the option to find a new home for it.
In some cases, you may decide to roll that 401(k) into an IRA at the same institution. For example, let's say your 401(k) is being held at JPMorgan Chase. You may decide to just open an IRA there that you manage yourself. Or, you can open an IRA at a different bank and roll the money into that account. The choice is yours.
Another option may be to roll your old 401(k) into a new one if you've managed to secure a new job and know that you have access to your upcoming employer's 401(k). This may be feasible if your employer gave you advanced notice of its closure and you were able to line up a new job fairly quickly.
In some cases, your 401(k) plan might remain open for quite some time after your company closes down. While you can technically opt to leave your 401(k) alone as long as your plan continues to be open, it's generally not a great idea to do so.
Leaving an old 401(k) where it is could mean running the risk of forgetting about your money. Capitalize reports that the number of forgotten 401(k) plans has increased by more than 20% since May of 2021. And all told, there are more than 29 million forgotten 401(k) accounts just sitting out there waiting to be claimed.
So once you find out that your company is closing, it pays to ask your benefits department when your 401(k) plan will be terminated. And if your company is already closed and you're already out of a job, contact your 401(k) plan administrator to find out what options you have for your money.
You may not want to wait until you find a new job to move your money out of your old 401(k). In that case, you can always open an IRA and roll the money into that account.
$0 for stocks, $0 for options contracts
$0
A clear standout for a modern investing experience, particularly for beginner and long-term investors. The ability to buy fractional shares, as well as the ability for everyday investors to participate in IPOs, bolsters our overall opinion.
On SoFi Active Investing's Secure Website.
$0 for stocks, ETFs, and options; up to $6.99 monthly for Robinhood Gold
$0
With no commissions, access to trade fractional shares and cryptocurrency through Robinhood Crypto, Robinhood is a no frills but efficient brokerage account.
On Robinhood's Secure Website.
Commission-free; other fees apply
$0
E*TRADE offers low fees and tons of account types. If you need it, chances are, E*TRADE has it. You can access advanced features through its popular Power E*TRADE platform. Open an E*TRADE account to trade fee-free mutual funds and do all your investing in one place.
On E*TRADE's Secure Website.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
E*TRADE services are available just to U.S. residents.
Robinhood disclosure
All investments involve risk and loss of principal is possible.
Securities are offered through Robinhood Financial LLC, member FINRA/SIPC. Cryptocurrency services are offered through an account with Robinhood Crypto, LLC (NMLS ID 1702840). Robinhood Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Cryptocurrency held through Robinhood Crypto is not FDIC insured or SIPC protected. For more information see the Robinhood Crypto Risk Disclosure.
Trades of stocks, ETFs and options are commission-free at Robinhood Financial LLC. Other fees may apply. Please see Robinhood Financial’s Fee Schedule to learn more.
Fractional shares are illiquid outside of Robinhood and are not transferable. Not all securities available through Robinhood are eligible for fractional share orders. For a complete explanation of conditions, restrictions and limitations associated with fractional shares, see the Fractional Shares section of our Customer Agreement.
Robinhood Gold is an account offering premium services available for a $5 monthly fee. Not all investors will be eligible to trade on Margin. Margin investing involves the risk of greater investment losses. Additional interest charges may apply depending on the amount of margin used. Bigger Instant Deposits are only available if your Instant Deposits status is in good standing.
