Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 0
The answer depends somewhat on when you plan to retire, how old you are, and the account balance. Generally if your balance exceeds a minimum, about $3500, then you have the option of leaving the money in the 401K account until retirement if you like. If less than that minimum, they can force you to close the account and either transfer to an IRA or take distributions and pay penalties.

For most people, transferring to an IRA account is the best choice (but if the 401K is good one with good investment choices, reasonable fees, and decent rules, leaving it there can be OK.) If the sum involved is not huge, then conversion to a Roth IRA can be a good idea. If you make no cash contributions to the IRA, you may move it to a future employers 401K at any time in the future.

IRA and Roth IRA are usually best because you can choose your own custodian and have many investment choices. Conversion to Roth IRA requires payment of current income taxes on the amount converted, but then no further income taxes are due in retirement--usually a good deal, but taxes on conversion can be forbidding in the case of large accounts.

Best of luck to you.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.