What To Do With Your Old 401(k) When You Change Jobs

During the process of changing employers or jobs one of the easiest things to overlook is what to do with your old 401(k). Or, perhaps, you didn’t change jobs but your company has merged with or been acquired by another company, and hence you get another 401(k). In today’s job market, it’s likely at some point in your working years you are going to have more than a single 401(k). Nowadays it’s rare for an employee spends their entire career at a single company.

What Happens When You Have Multiple 401(k)s?

It is much more difficult to keep track of your retirement path, your investments, your risk allocation, etc. when you have multiple 401(k)s. There’s a good chance you’ll forget to check in on your old investments and it may not be in line with your current risk tolerance. You are also limited in your investment options to what your current plan offers. Your old plan may only offer funds with higher fees than your new employer. You also risk your prior company going out of business, which will make getting proper paperwork on your account nearly impossible.

What Are Your Options For Multiple 401k(s)?

Do Nothing

You could do nothing and keep the money exactly where it is now. However, I don’t recommend that. You could also cash-out your 401(k), but it’s likely you’ll have to pay taxes and penalties for doing this. I caution against that, as well, since a 401(k) is meant for retirement—not something like buying a new car. If you know you’re the type of person where the money will be too tempting to spend, then keep the money where it is and hire a financial adviser to help keep you accountable.

Transfer to Current Employer

You could transfer the balance into your new company 401(k). This option is a little better as it consolidates your retirement accounts, but you’re still going to be limited in your investment options to what your new plan offers.

Rollover to IRA

In most circumstances what I recommend is to roll over your old 401(k) balance into a traditional or Roth IRA. This will allow you to have an almost infinite number of investment options at your disposal. You’ll want to make sure these accounts are opened before you begin the transfer process. You’ll need to fill out paperwork with your prior 401(k) custodian and then contact your new custodian as well where the IRA is and let them know what you are wanting to do. They may have some insights to make the process easier. You have 60 days to make sure the money is in the new account before it’s deemed a cash-out (with penalties to follow), so keep an eye on it and make sure the money is deposited.


Rolling over your 401(k) is something the DIY investor can handle on their own. That being said, if you are not a DIY investor, I recommend getting a professional involved to help you out. When choosing a financial advisor, make sure to find someone who is fee-only and hopefully has a CFP® certification.


If you have a 401(k), or many 401(k)s, and need help consolidating, let me take the stress off your shoulders and help you with this sometimes confusing process. To learn more about Melby Wealth Management and the services we provide, click the button below to arrange your free initial consultation.

While this website provides general information, it does not constitute financial advice for your individual situation. The best way to get guidance on your specific issue is to contact a financial advisor. To schedule a meeting with Shaun Melby, CFP®, please call or complete the intake form below.

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About The Author

Shaun Melby, CFP® provides fee-only financial planning and investment management services in Nashville, TN. Melby Wealth Management serves clients as a fiduciary and never earns a commission of any kind. Shaun has over 10 years of experience as a financial advisor in Nashville.