Financial Tip of the Day:
If you’re like me, you’ve had more than one employer sponsored retirement account. You have moved on from one job to another (or are in between jobs) and left your retirement funds in your old employer’s plan. Often, individuals leave their funds in the old account out of convenience or laziness, with little afterthought. If you do opt to leave it there, be actively aware of what’s happening with your account.
Rather than leaving it sitting there with the past employer, you can find out if/how to rollover those funds into your new employer’s plan. If you don’t have a new employer, you can usually rollover your old employer sponsored account into an individual account. Most 401k administrators will even do the rollover for you, if you move the funds to their company. Each option has different tax impacts, so you’ll need to see which one is best for you.
As tempting as it may be to withdraw the money to spend it now, I warn against it. It takes a lot of time to build up retirement savings, but just minutes to blow all of it. Plus, any money withdrawn prematurely results in paying early withdrawal penalties and taxes on them. DON’T withdraw the funds, just ROLL THEM OVER. Before you know it, you’ll be retiring - and you’ll really need those funds then.