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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 has enjoyed extraordinary success providing comprehensive financial planning to retirees, entrepreneurs, entertainers, and executives by taking the time to truly know his clients, understand their goals and develop and execute their ongoing, strategic, financial plans.

Jeff earned his finance degree in business administration from Ohio University and has held executive positions with financial planning firms for more than two decades. After serving as Vice President of Investments of Lykins Financial Group, CPA’s, in his hometown of Westerville, Ohio, Jeff moved to Nashville, Tennessee to found SageSpring Wealth Partners in 2002. As its President, Jeff has led SageSpring to remarkable success, holding the distinction of being one of Raymond James’ top independent contractor offices, and a member of its Chairman’s Council*, every year since 2008.

Jeff’s true calling, however, is working directly with clients, helping them plan their financial futures in a manner that aligns with their values and helps provide them with financial confidence. To help meet these goals, Jeff leads the team of Dobyns Wealth Team and also incorporates the expertise of attorneys, accountants and other professionals to provide quality financial, tax and estate planning, and ongoing asset and risk management.

As independent advisory businesses, neither SageSpring Wealth Partners nor Dobyns Wealth Team hold any assets on behalf of clients, with such custodial and brokerage services being provided by Raymond James. As a leader in wealth management, Raymond James has an exemplary reputation and today serves more than $930 billion in client assets through 8,200 financial advisors worldwide (as of 9/30/2020).

In order to meet the highest standards of professionalism and ethics in the industry, Jeff is a CERTIFIED FINANCIAL PLANNERTM practitioner**, a Chartered Life Underwriter and a Chartered Financial Consultant. Jeff is also a participant of the Dave Ramsey SmartVestor program.

Jeff’s work and personal life are both guided by his faith and the Christian principles of honesty, generosity, compassion, and integrity. Accordingly, Jeff devotes considerable time and resources to a number of causes, including serving as a board member of Men of Valor, a prison ministry and mentoring program. He is also on the advisory board of The Signatry of Middle Tennessee, which works with families to increase their charitable giving to their favorite causes. Additionally, Jeff is on the advisory board for Halftime Institute, an organization that coaches marketplace leaders to discern and engage in their life purpose. Lastly, Jeff serves on the board of the Legacy Center of Nashville, a collaboration of independent coaching resources. 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 raising their family in Brentwood where they are members of the Brentwood Baptist Church, and their children, Gracyn, Hunter, and twins Tanner and Logan, attend the Christ Presbyterian Academy. For recreation, Jeff enjoys hunting, fishing and just being outdoors.

* Membership is based on prior fiscal year production. Re-qualification is required annually.

**Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

SmartVestor is an advertising and referral service for investing professionals (“SmartVestor Pros”) operated by The Lampo Group, LLC d/b/a Ramsey Solutions (“Ramsey Solutions”). Pursuant to an arrangement between Ramsey Solutions, SageSpring Wealth Partners and your advisor, your advisor pays Ramsey Solutions a flat monthly fee to: (a) be a SmartVestor Pro, (b) advertise services through the SmartVestor website, and (c) receive client referrals in the form of an initial introduction to interested consumers who are located in your advisor’s Pros geographic region. SageSpring Wealth Partners does not endorse and are not affiliated with Ramsey Solutions, except with respect to the arrangement described above, and neither Ramsey Solutions nor its agents are officers or employees of SageSpring Wealth Partners. Further, neither Ramsey Solutions nor its agents are authorized to provide investment advice or act in any way on behalf of SageSpring Wealth Partners, except in connection with providing your contact information to your advisor.

Ramsey Solutions’ 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.

Raymond James is not affiliated with any of the organizations mentioned above.