When you leave a job for another one, you might be asking yourself whether you should roll over your old 401(k) to your new one.

A 401(k) plan can be left with your original plan sponsor (depending on the amount in the account), rolled over into a traditional or 澳洲幸运5开奖号码历史查询:Roth individua⛦l retirement account (IRA), distributed as a lump-sum cash payment (penalties, if you're under age 59½), or transferred to your new employer’s 401(k) plan.

Each option for your old 401(k) has advantages and disadvantages, and there isn't a single selection that works best for all employees.

Here are the steps you need to take if you're rolling over your old 401(k) plan into your new employer's 401(k)—plus the pros and cons for doing so.

How to Roll Over an Old 401(k) to a New 401(k)

The first step in 澳洲幸运5开奖号码历史查询:transferring an old 401(k) to a new employer's qualified retirement plan is to speak with the new 澳洲幸运5开奖号码历史查询:plan sponsor, custodian, or human resources manager. Because not every employer-sponsored plan accepts transfers from an outside 401(k), it is imperative for you to ask 🔯if the option is availabl༺e at your new employer. If the plan does not accept 401(k) transfers, you need to select one of the three other options for the 401(k) account balance: leave it where it is (if allowed), roll it over into an IRA, or cash it out (and pay a 10% penalty if you'𓃲re younger than 59½).

If your new plan does accept 401(k) transfers, you'll need to fill out a bit of paperwork. You'll provide your name, date of birth, address, 澳洲幸运5开奖号码历史查询:Social Security number, and other information, including details about your old employer's plan, such as the total amount to be transferred, investment selections held in the account, date contributions started and stopped, and contribution type, such as 澳洲幸运5开奖号码历史查询:pre-tax or Roth. Once you're finished, return it to the plan sponsor for processing.

After both your old and new plan sponsors approve the transfer, your old plan sponsor will distribute the balance of your 401(k) account to your new plan sponsor in the form of a check. After the check is received, the new plan sponsor will deposit the check and purchase investments according to your new plan selections.

A transfer from one 401(k) to another is a tax-free transaction, and no early withdrawal penalties are assessed.

♒Pros and Cons of Transferring Assets from an Old 401(k) to a New 🏅401(k)

Pros

The biggest advantage of rolling over🗹 an old 401(k) into a plan with a new employer is the ease of management. Instead of tracking investment selections, performance, or statements for multiple accounts, a transfer creates a single account that you can easily monitor.

In addition, 401(k) plans typically carry lower fees on investments and transactions than rollover IRAs due to the group plan's purchasing power.

Older employees have an additional advantage: Money held in the 401(k) of the company where an employee is currently working is not subject to 澳洲幸运5开奖号码历史查询:ꦉ💙required minimum distributions (RMDs). Account holders who turn 73 on or after Jan. 1, 2023 must take RMDs if they leave money in their previous employer's plan, according to the SECURE ACT 2.0. Anyone in this situation who turned 72 between Jan. 1, 2020, and Dec. 31, 2022 would be required to take these withdrawals.

Cons

Transferring a 401(k) may not be the best choice for every employee. Employer-sponsored plans are limited to a certain number of investment options. These restrictions may not allow you to invest the way you want and may lead to poor 澳洲幸运5开奖号码历史查询:asset allocation or a lack of 澳洲幸运5开奖号码历史查询:diversification over time.

Additionally, employees who participate in a 401(k) do not have a say in the company or the individual who manages the plan. The plan sponsor and company executives have total control over 澳洲幸运5开奖号码历史查询:how the plan is es🔜tablished and maintained.

The process of transferring a 401(k) to a new plan also can be time-consuming, as the ꩲnew plan sponsor is tasked with vetting the old plan’s qualified status, hire and termination dates, and total balance eligible for the transfer.

The Bottom Line

The transfer of an old 401(k) plan to a new plan is a great choice for some employees. However, you'll need to weigh the pros against the cons. It will take some paperwork and patience to go through the process, but it's pretty straightforward.