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When you make the decision to leave your employer and start anew, you’ve got all kinds of questions running through your head. Will I like my new job? Am I making the right choice for my career? Will my new colleagues be awesome, or a total drag?

One thing that can catch people off guard is the packet of 401(k) paperwork from the HR Department. Now you’re faced with yet another decision: What to do with that money you’ve been diligently putting away. Most employers give you three options to choose from. You can cash out the account, leave it where it is, or transfer it to an IRA. Before you start checking those boxes at random, be aware of what you’re getting into. These are your hard-earned retirement savings we’re talking about!

Here are the ups, the downs and our two-cents on your options:

Take it in cash:

The ups: You’ll have some cash freed up to do with what you’d like.

The downs: You’ll most likely be socked with a penalty for early withdrawal, and you can count on some tax consequences to boot. Even more than that, you put all that effort into being disciplined about financially planning for your future. Cashing out your account means you’re losing that leg up you’ve made for yourself.

Our two-cents: As tempting as this may sound to free up some of your funds, going this route is usually a bad idea. You shouldn’t pull from your retirement savings unless it’s absolutely necessary. Why, you say? The tax bill will often be steep, the penalty is nothing to sneeze at, and you’ll be back to square one with your saving, which you’ll most certainly regret years from now.  IF this is the direction you choose to go please make sure you consult with an accountant to get an idea of the tax implications.

Leave it where it is:

The ups: There’s a comfort level in going this route, for sure. You’ve grown accustomed to seeing those account statements, and you may have even built up a relationship with the plan’s financial advisor. The fees and admin costs on your old employer’s plan could potentially be lower than those charged by some advisors. Plus, you don’t really have to do anything to leave your account as is, which can cut down on your new job paperwork load.

The downs:  You’re often limited in your investment options, as 401(k) providers have only certain buckets of investments you’re able to put your money in. You may find that the plan fees and expenses are in fact higher than they would be if you moved your account. Finally, generally speaking, transferring your account to an individual financial advisor should get you more customized service based on your particular situation.

Our two-cents: This one is really a toss-up in many cases.  You need to evaluate the relative costs and benefits of staying put versus working with an advisor. You may also have the option of consolidating it into your new employer’s retirement plan. We recommend interviewing some other advisors and evaluating any available retirement plans to get a solid grasp for the good and bad of each choice. When you start looking at the investment fees and expenses side of the equation, give this blog post a glance over first for a refresher on why it all matters.

If time’s running short and you feel like you need more info before making a final decision, leaving the account where it is for now, and rolling it over into an IRA or your new company’s plan later is certainly a possibility too.

Roll it over into an IRA:

The ups: You’re really taking the reins, and becoming more actively involved in your investments. At the same time, consolidating a couple old 401(k)s into one account is just easier to keep track of.  There is also the possibility of making additional contributions if your new employer does not have an established plan.

The downs: You could potentially pay higher commission charges and fees at some traditional financial services firms than you did under your old company plan.

Our two-cents: If you decide to roll it over, you’re making the decision to take a more active role with your finances, which is a good thing. Kudos to you! Plus, if you have multiple small 401(k)s scattered around between custodians, rolling them all into one larger account gives you and your new financial advisor a clearer picture to work with. To top it all off, we find that simplifying makes investing a lot more approachable for people.

Regardless of what you end up deciding to do with your old 401(k), staying on track with your retirement saving is a must-do. Once you’re established in your new job, make sure you sign up for that company’s retirement plan if one’s available to you. If not, consider contributing to an IRA each month instead. Saving for retirement takes decades, and building the habit now sets you up for success down the road.

If you’re still on the fence about which choice is right for you, or your employer gives you some other options to think about, we’d be happy to provide more guidance. Just reach out!