When you leave a job with a 401(k), it can be confusing to know what to do. Many people aren’t sure how to handle it at all. No matter what job you move to next or even if you don’t, you should transfer the money into your own Rollover IRA and Roth IRA based on whether the dollars in your 401(k) are pre-tax or post-tax.
If you don’t already have these accounts, open them at a reputable brokerage like Fidelity. Then call your 401(k) administrator and request a direct rollover. Make sure all pre-tax dollars go into your Rollover IRA and all post-tax dollars go into your Roth IRA. This keeps the tax types separated and avoids negative tax consequences.
Doing this incorrectly can lead to IRS penalties and extra taxes. Handling it the right way gives you full control, more investment options, and a cleaner setup. If you get a new job with a 401(k), you can keep all accounts and, if you ever leave that job, you can repeat the same process.
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