Liquidating your 401k

06 Jul

If you have a substantial amount saved, and you like your plan portfolio, leaving your 401(k) with a previous employer may be a good idea.

If you are likely to forget about the account or are not particularly impressed with the plan's investment options or fees, however, then consider some of your other options.

Every day thousands of employees switch jobs from one company to another.

One thing that needs to be taken care of in this process is the employee’s 401k.

Once you are enrolled in a plan with your new employer, it's simple to roll over your old 401(k).

You can elect to have the administrator of the old plan deposit the contents of your account directly into the new plan by simply filling out some paperwork.

Alternatively, you may roll over an old 401(k) into a new account with your new employer; begin taking distributions; cash it out entirely; or roll it into an IRA.

Are you trying to find out how to cash out your 401k from old jobs? We’ve got some advice for you in this post on how to go about cashing out your 401k, as well as an alternative option to cashing out that may save you more money.The third is that you usually have to pay a 10 percent penalty as well.This means that you don't get a lot out of what you take out of your account.In that case, some plans allow you to borrow for 25 years.Spousal Stamp of Approval If you’re married, your plan may require your spouse to agree in writing to a loan.If you need cash, you may be tempted to borrow from your 401(k) rather than applying to a bank or other lender. And with most plans, you repay your loan through payroll deductions so you're unlikely to fall behind as long as you remain employed.When you borrow from your 401(k), you sign a loan agreement that spells out the principal, the term of the loan, the interest rate, any fees and other terms that may apply.You may have to wait for the loan to be approved, though in most cases you’ll qualify. The IRS limits the maximum amount you can borrow at the lesser of ,000 or half the amount you have vested in the plan.Sometimes there’s also a loan floor, or minimum amount you must borrow.After you leave your job, there are several options for your 401(k).Depending on how much you saved, you may be able to leave your account where it is.