cheerful female applicant and her new employer sha 2021 09 24 03 45 34 utc min

What to Do with a 401(k) After Changing Jobs

Did you know that Americans change jobs every 4.2 years on average?1 In many cases, this means accepting a promotion or a new role within your existing company. But if you’re changing employers, don’t forget about your 401(k). Old retirement accounts are often forgotten after making a career change. If you’ve recently accepted a new job and want to maximize your retirement savings, here are a few options to consider.

1. Keep your 401(k) from your previous employer. 

Depending on your investment options, you may want to keep your retirement account active. This is certainly an option, but we recommend checking in frequently to make sure things are still on track. Check to ensure that you won’t be subject to costly maintenance fees over time that could inhibit your account growth. 

If you’re leaving a job after a short time, you may be wondering what to do with a small 401(k). Your previous employer may require you to transfer your money if you’ve accrued less than $5,000.2 If you’ve saved $1,000 or less, you’re likely to receive a check for that amount. Remember to transfer that money into a new 401(k) or another retirement option, like an IRA, to avoid owing taxes or paying withdrawal penalties. 

2. Transfer your money to a 401(k) with your new employer. 

This option may help you to keep a closer watch over your retirement funds, and your new job may offer lower fees or a higher percentage match. Talk to your investment advisor to compare options before making the change, but it could be an advantageous decision. 

There are pros and cons to rolling over your 401k to a new employer. In the pro column: a direct rollover allows you to transfer your money simply without taxes or penalties. On the other hand, 401(k) transfer rules can be complex, and if you don’t follow them, you could be hit with a 20% withholding fee or a 10% early withdrawal penalty.3 This is why we always recommend seeking professional advice as you make the transition.

3. Roll over your 401(k) into an IRA. 

Individual retirement accounts often offer a wider range of investment opportunities, so a career transition may be the perfect time to consider a new retirement savings option. There are many differences between 401(k)s and IRAs, from investment options to contribution limits, so you should compare and contrast before making a decision. We believe that both options offer great benefits, but one option may be more advantageous than the other for your specific retirement plan. 

You can roll over your 401(k) into a traditional IRA without paying taxes now – though they will be due when you withdraw funds later. You can also choose a Roth IRA, which will entail paying taxes on your 401(k) withdrawal now, but allows your investment to be withdrawn tax-free later on. 

4. Cash out the account. 

This is one we strongly caution against. Not only do you lose out on any potential tax-deferred growth, cashing out the account is a taxable event. Not only will you have to pay taxes on any growth, if you are younger than age 59 1/2, you will also be hit with a 10% penalty.

If you’ve recently changed employers and want to create a smart savings plan, a SageSpring advisor can help you evaluate your options. We follow a holistic approach to financial advising, helping you choose the best option for your future. Contact us today to build a long-term financial strategy that will set you up for a successful retirement. 

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of SageSpring Wealth Partners and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. 

Jeffrey Dobyns
Jeffrey T. Dobyns


President, SageSpring | Financial Advisor, RJFS 

Jeffrey T. Dobyns

President, SageSpring | Financial Advisor, RJFS

Jeff Dobyns is President and Founder of SageSpring Wealth Partners. Passionate about serving his clients, he strives to truly get to know them, understand their goals, and provide them with financial confidence before developing and executing ongoing, strategic financial plans. 

In order to meet the highest standards of professionalism and ethics in the industry, Jeff is a CERTIFIED FINANCIAL PLANNER™ professional, a Chartered Life Underwriter, a Chartered Financial Consultant, and a participant of the Dave Ramsey SmartVestor referral service program.

Jeff has held executive positions with financial planning firms for more than two decades. He served as VP of Investments of Lykins Financial Group CPAs before founding SageSpring in 2002. Jeff has been recognized for his unwavering commitment to his clients, and as a leader among Raymond James financial advisors, earning membership in Raymond James Chairman’s Council every year since 2008.

Jeff devotes considerable time and resources to a number of causes. He serves as Chairman of the Board of Men of Valor, a prison ministry and mentoring program. He is on the advisory board of The Signatry of Middle Tennessee, which works with families to increase their charitable giving to their favorite causes, as well as the advisory board for Halftime Institute of Nashville, an organization that coaches marketplace leaders to discern and engage in their life purpose. Jeff also serves on the board of Send Musicians to Prison, which shares hope, healing and restoration with the imprisoned through musicians & artists. He is a past board member of Porter’s Call, a Nashville charity that provides free counseling for musicians and their families, and the Martha O’Bryan Center, which empowers those in poverty to transform their lives through work, education, employment, and fellowship.

Jeff and his wife, Amy, are grateful to be raising their four children, Gracyn, Hunter, and twins Tanner and Logan at Christ Presbyterian Academy. Jeff enjoys being outdoors with his family- boating, hiking, skiing, hunting and fishing.

Ramsey Solution’s relationship and agreement is between SageSpring Wealth Partners only. Raymond James Financial Services, Inc. is not affiliated with the solicitor arrangement between Ramsey Solutions and SageSpring Wealth Partners.

Membership is based on prior fiscal year production. Re-qualification is required annually.  The ranking may not be representative of any one client’s experience, is not an endorsement, and is not indicative of an advisor’s future performance. No fee is paid in exchange for this award/rating.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.