What Happens When You Leave a Job With a 401(k)?
The big thing to know is that your 401(k) still exists after you leave the job. You may be completely done with that company and still have the same 401(k) months or even years later.
What stops is the new money going into it through that job. There’s no more money coming out of your paycheck and no more employer contributions, but what’s already in the account can stay invested and keep changing in value.
Your Old 401(k) Doesn’t Just Move With You
If you start a new job with a 401(k), your old account doesn’t automatically join it. You can have a brand-new 401(k) through your new employer while the money from your previous job is still sitting in the old plan.
The money can move later. An old 401(k) can be rolled into another retirement account, and sometimes that can be the 401(k) at a new job. It just doesn’t happen because you changed jobs. You have to trigger the move yourself. Until you do, the old and new 401(k)s remain separate accounts.
Not Everything in the Balance May Be Yours Yet
The balance you saw before leaving the job isn’t always the amount that stays in your 401(k). Your own contributions are yours, but some of the money your employer added may have required you to stay at the company for a certain amount of time before it became fully yours.
That’s what vesting refers to. If you leave before some employer contributions are vested, you can lose that portion. If you’re fully vested when you leave, those employer contributions are already yours.
What Happens Can Depend on Your Plan
An old 401(k) can remain in a former employer’s plan, but that isn’t guaranteed in every situation. What happens can depend on the plan’s rules and the amount of money in the account.
Some plans have rules for smaller balances that allow the money to be moved out of the former employer’s plan after employment ends. If you have questions about what happens to your specific 401(k), the plan administrator can explain the rules that apply to your account. You can usually find the plan administrator or contact information on your 401(k) statements.