Job hunting might be the only thing on your mind after losing a job, but don't let your 401(k) from your previous employer slip through the cracks. Deal with wrapping up those loose ends before diving into the job search head first, otherwise you're more likely to indefinitely postpone the task.
Your 401(k) savings can be rolled into a Traditional IRA account without penalty. The bank that holds your IRA account will have paperwork for you to complete and will initiate the rollover. Your 401(k) will be liquidated and funds amounting to the account's market value at the time of liquidation will be transferred to your IRA account. From there, you'll need to rebuild your retirement account by choosing new investments. You could try and hold off until you've found another job and roll your retirement savings into your new employer-sponsored retirement plan, but there's no guarantee your new job will offer one.
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i never know what i'm supposed to do with this when i leave a job, so thank you for reminding me that i don't want to lose those funds. in today's economy, we need to really keep tabs on all of our money that's being saved etc.
1I actually just did this and it was surprising easy. I think everyone should review their old pay stubs to see if you are missing any old 401K.
2Here's my question about rolling over 401(k)s ... what do you do after the first time? I rolled over my account from my last job, and now I have a 401(k) at my new job and a rollover IRA. They are with different fund-management companies. When I leave my current job, do I roll it over into my current rollover IRA or do I create yet another rollover IRA? I don't want to have 5-10 different accounts when I retire, although I can see that it might be smart to keep from having too much money in one account.
That issue aside, rolling it over was pretty easy. I didn't do it for a few months after I left my job and when I did it was just a quick phone call and a few signatures.
3valancyjane- Good question! You can use the same IRA rollover account for any and all of your 401(k) accounts. No need to create separate IRAs unless your 401(k) is a Roth 401(k).
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