“There are areas of employee benefits they need to consider,” she said, such as health insurance coverage<\/a> and loss of disability insurance.<\/p>\n “Usually [dealing with] their 401(k) is not urgent,” Braxton said. “Just don’t forget about what is one of your biggest assets.”<\/p>\n Here’s what to know.<\/p>\n First, how to handle that 401(k) loan<\/p>\n Among 401(k) plans that allow participants to borrow money against their account, roughly 13% of workers had an outstanding loan in 2024, according to Vanguard’s How America Saves 2025<\/a>. The average balance owed was $11,000. Those numbers have changed little over the last five years.<\/p>\n If you have a loan against your 401(k) account when you leave a company, how it’s handled depends on the specifics of the plan. For example, 44% let you continue repayment on the loan, the Vanguard research shows.<\/p>\n Another possibility: If you get a new job, you may be able to roll over the loan, along with the assets in your account, to the new company’s plan, said Will Hansen, executive director of the Plan Sponsor Council of America.<\/p>\n The share of companies that allow either the loan to leave the plan alongside assets or accept a rolled-over loan is 15%, according to new research from Hansen’s organization. It’s most common among employers with 5,000 or more employees, at 24.4%.<\/p>\n “More plans are allowing a rollover of a plan loan,” Hansen said. “If you get a new job, check with your employer to see if they accept an outstanding loan in a rollover.”<\/p>\n If your plan allows neither of those options, you may have to pay the loan back fairly quickly. Otherwise, the amount will be considered a distribution from your account \u2014 in which case you may owe income taxes<\/a> on it, Braxton said. And if you are younger than age 59\u00bd, a 10% early-withdrawal tax penalty could apply, too.<\/p>\n If it is initially treated as a distribution, you get until tax day \u2014 typically April 15 \u2014 of the following year to put an equivalent amount into an individual retirement account<\/a> or other qualified account to avoid the tax hit.<\/p>\n Decide what to do with your 401(k) balance<\/p>\n Aside from loan considerations, you’ll need to make decisions about what to do with your 401(k) savings. One option is to leave it in your former employer’s plan<\/a> \u2014 most allow it.<\/p>\n However, if your balance is low enough, the plan may not let you stay. If your balance is below $1,000, your account may be liquidated and sent to you in check form, which would generally be subject to income taxes. And if you’re younger than 59\u00bd, you may owe the 10% early-withdrawal penalty.<\/p>\n An exception to that is called the Rule of 55: If you leave your job in or after the year you turn 55, you can take penalty-free distributions from your 401(k).<\/p>\n Your ex-employer can also roll over balances below $7,000 to an IRA. If that happens, the money may not be invested<\/a> how you’d prefer. A 2024 Vanguard study<\/a> showed that 48% of investors with a rollover IRA thought the money was automatically invested, and 46% didn’t know their contributions were allocated to money market funds by default.<\/p>\n Of course, you also can actively move your 401(k) balance<\/a> to another retirement account, which could include a 401(k) at another employer or an IRA. In either case, you may be able to find the same or similar investments that you’ve used in your 401(k), such as target-date funds or index funds, Braxton said.<\/p>\n The right choice for your money can depend on a host of factors<\/a>, including available investment options and the fees charged. Additionally, consider any conflicts of interest<\/a> on the part of financial professionals giving you advice\u00a0on rollovers.<\/p>\n Be aware of moves that trigger a tax bill<\/p>\n Braxton added, however, that if you make any moves that could affect your tax situation \u2014 for example, rolling over 401(k) assets from a former employer to a Roth IRA \u2014 it’s important to get some professional guidance. While Roth assets grow tax-free and are tax-free upon withdrawal in retirement, contributions are made on an after-tax basis \u2014 unlike traditional 401(k) contributions. So if you convert pre-tax money to a Roth account, you will owe taxes on the amount.<\/p>\n If you have a Roth 401(k), it can only be rolled over to another Roth account, but that move would not trigger upfront tax consequences.<\/p>\n Also, if you decide to move your retirement savings, experts recommend a trustee-to-trustee rollover, which sends the transfer directly to the new 401(k) plan or IRA custodian. Having a check issued to yourself creates potential risks \u2014 if there’s a mishap in depositing the funds into a qualified retirement account, it could be treated as a withdrawal and subject to taxes and penalties.<\/p>\n While you’re making decisions about a 401(k) with a former employer, keep in mind that while any money you put in your account is always yours, the same can’t be said about employer contributions.<\/p>\n Vesting schedules<\/a> \u2014 the length of time you have to stay at a company for its matching contributions to be 100% yours \u2014 can be immediate or up to six years<\/a>. Any unvested amounts generally are forfeited when you leave your company.<\/p>\n","protected":false},"excerpt":{"rendered":"Jackyenjoyphotography | Moment | Getty Images More from Financial Advisor Playbook: Here’s a look at other stories affecting…\n","protected":false},"author":2,"featured_media":134755,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[5740,138,553,3121,246,29102,111,139,69,244,2533,245,2341,2532,28110,29104,38526],"class_list":{"0":"post-134754","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-amazon-com-inc","9":"tag-business","10":"tag-business-news","11":"tag-careers","12":"tag-finance","13":"tag-financial-consulting","14":"tag-new-zealand","15":"tag-newzealand","16":"tag-nz","17":"tag-personal-finance","18":"tag-personal-saving","19":"tag-personalfinance","20":"tag-personnel","21":"tag-retirement-planning","22":"tag-target-corp","23":"tag-tax-planning","24":"tag-united-parcel-service-inc"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/134754","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=134754"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/134754\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/134755"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=134754"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=134754"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=134754"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Is](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2025\/11\/108221206-17622740741762274071-42409848142-1080pnbcnews.jpg\")
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