🔁 What to Do With Your Old 401(k): Rollover, Convert, or Leave It?
Changing jobs comes with a long to-do list—new benefits, new routines, and maybe even new financial goals. But one question that often slips through the cracks is:
“What should I do with my old 401(k)?”
If you’ve recently changed jobs (or are planning to), you may be wondering whether to leave your 401(k) where it is, roll it into a new plan, or convert it into a different type of account entirely. The answer depends on your goals, taxes, fees, and how hands-on you want to be with your retirement savings.
Here’s a guide to help you make the smart choice.
🧭 Your Options at a Glance
When you leave a job, you typically have four choices for your 401(k):
✅ Option 1: Leave It With Your Old Employer
When it might make sense:
The plan has great investment options and low fees
You want to keep things simple and aren’t ready to decide
You're over 55 and might want to use the Rule of 55 (penalty-free access)
Things to watch out for:
You may lose access to plan tools or support
The old employer may eventually force small accounts (<$5,000) out
🔄 Option 2: Roll It Into Your New 401(k)
When it might make sense:
You want everything in one place for easier tracking
Your new plan has good investment options and low fees
You’re planning to borrow from your 401(k) in the future (only current plans allow loans)
How to do it:
Contact your new plan administrator for rollover instructions
Request a direct rollover from the old plan to the new one (to avoid taxes)
🧠 Option 3: Roll It Into a Traditional IRA
When it might make sense:
You want more investment flexibility
You’re looking to reduce account fees
You want to control the account independently from any employer
Benefits:
Access to nearly unlimited investment options (ETFs, mutual funds, stocks)
You can consolidate multiple old 401(k)s into one IRA
Keep in mind:
No loan options (unlike a 401(k))
IRAs don’t have the same federal creditor protections in some states
May lose Rule of 55 early access if you need funds before 59½
🔁 Option 4: Convert to a Roth IRA
When it might make sense:
You expect to be in a higher tax bracket later
You want tax-free withdrawals in retirement
You’re executing a long-term Roth conversion ladder for early retirement
What to know:
You’ll pay ordinary income tax on the amount you convert
Best to do this in low-income years (e.g., gap year, sabbatical, early retirement)
Converted funds must stay in the Roth IRA for 5 years before tax-free access
🧮 Pro Tip: Consider partial conversions over several years to manage your tax bracket.
🧹 Bonus: Clean-Up and Consolidation Tips
No matter what you choose, here are some smart next steps:
Track down all your old accounts (you might have forgotten one!)
Compare fees and investment choices before deciding
Use a rollover tracker or spreadsheet to keep everything organized
Set a calendar reminder to rebalance investments annually
Consider working with a financial planner to coordinate tax and retirement strategies
💬 Final Thoughts
Your old 401(k) is more than just a leftover account—it’s a piece of your long-term wealth strategy. Whether you leave it where it is, roll it into a new plan, or convert it into a Roth, make sure your choice aligns with your bigger financial goals and gives you the flexibility, control, and tax benefits you need.
📩 Need help deciding what to do with your old 401(k)?
We can walk through the options, run tax projections, and help you take action with clarity and confidence. Reach out anytime!