Depending on your account balance and your employer’s policy, you may have options for how to handle the money.
The first decision for your retirement savings is to leave it in your former employer's plan, if permitted. Of course, you can no longer contribute to the plan or receive any employer match."The risk is that you are going to forget about it down the road," said Will Hansen, executive director of the Plan Sponsor Council of America.Also be aware that if your balance is low enough, the plan might not let you remain in it even if you want to.
If you decide to move your retirement savings, you should do a trustee-to-trustee transfer, where the balance is sent directly to the new 401 plan or IRA custodian. In simple terms, unless you are able to come up with that amount and put it in a qualifying retirement account, it is considered a distribution that may be taxable. And, if you are under age 55 when you leave the job, you'll pay a 10% early withdrawal penalty. plans — more on that below.)
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