Switching Jobs in 2026? 3 Things You Can Do With Your Old 401(k)

You may be excited about your new job, but you also may be a little overwhelmed. You're still trying to learn the ropes of your new position and juggle all the other responsibilities life throws at you. It doesn't leave much mental bandwidth to think about things like what to do with your 401(k) from your old employer.

The truth is, you probably don't have to do anything with your old 401(k). But if you're unsure about leaving your money where it is, there are only two other things you can do with it -- and for most people, there's one very clear winner. Here's a closer look at all your options so you can figure out which is right for you in minutes.

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1. Leave your money where it is for maximum ease in the present

Leaving your old 401(k) alone is your easiest option, especially if you've got a lot of other things on your plate. You won't be able to contribute new funds to the account, but your existing funds will remain invested. You'll still be free to change your investments within the limits of what the plan offers.

It's totally fine to do this if you like your old plan or if you just don't feel up to moving your money at the moment. However, it may not be your best long-term option because managing investments across multiple accounts can be challenging.

Staying with your old 401(k) might not be an option for you at all if you have less than $7,000 in the account. By law, if you have between $1,000 and $7,000 in your account, your employer can close your 401(k) after you leave your job and transfer the money to an IRA in your name. If there's less than $1,000 in your account, it can cash it out and send you a check.

2. Withdraw it for a quick influx of cash -- at your peril

You also have the option to cash out your account, but you probably shouldn't. This gives you a quick influx of cash and complete control over what you do with the funds.

The catch is, if you don't deposit it into a new 401(k) or IRA within 60 days, the government considers this a distribution. You'll pay ordinary income tax, plus a 10% early withdrawal penalty if you're under age 59 1/2 and miss out on the earnings you would've gotten if you'd kept that money invested.

If you decide to proceed with this option, you'll need to contact your plan administrator or request the check through your old 401(k) account portal. The check you receive will have 20% of your balance withheld for federal tax purposes. If you're trying to avoid tax penalties, you'll need to make up that missing 20% on your own with cash from other sources.

This is rarely your best option, especially if you're far from retirement and don't need the money now. But if you've already cashed out your account or your employer has done it for you, don't panic. Move as much as you can to a 401(k) or IRA (more on that below) within 60 days to avoid problems with the IRS.

3. Move it to a 401(k) or IRA to simplify account management and maximize growth

Moving your old 401(k) funds to a new 401(k) or IRA is the best option for most people. It lets you avoid the tax penalties that come with cashing out your 401(k) and can reduce the number of retirement accounts you have to manage. If you decide to roll over to an IRA, you also gain a lot more control over what you invest in.

Transferring your 401(k) funds is pretty easy. First, decide where you want to move your money. If you choose a new 401(k) plan, you'll need to double-check with your employer to see if it allows rollovers, as some plans don't. If you choose an IRA, you can open one with many banks and brokers.

Then, all you have to do is let your old 401(k) plan administrator know where you want the funds transferred to. Your new plan administrator may be able to assist you in determining what information you need to provide if you're unsure. That's it. You'll pay a small, one-time rollover fee that comes out of your account balance, but the rest of your money will transfer without any tax consequences.

It's alright if you don't feel up to moving your old 401(k) funds right now. You can wait until life slows down a bit. Just don't forget about it altogether. You worked hard for that money, and it'll work hardest for you if it's somewhere where you can easily see it and make conscious choices about how to invest it.

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