Do you know what happened to that money you contributed to your employer’s 401K program? Are you worried it’s lost for good? Don’t fret, we’ve got you covered on what happens to your unused retirement money.

Did you quit?

If you have more than $5,000 invested in your 401K, most plans allow you to leave it where it is after you separate from your employer. If it is under $1,000, the company can force out the money by issuing you a check.

Or were you let go?

If it is between $1,000 and $5,000, the company must help you set up an IRA to host the money if they are forcing you out.

Can you roll it into an IRA?

Absolutely. Rolling an old 401K into an IRA, specifically a self-directed IRA can be incredibly advantageous for you. A self-directed IRA with Accuplan allows you to invest in what YOU want, not just stocks, bonds, and mutual funds that are offered by 401K companies. We offer flat fees and true self-direction. Call us now: 866-454-2649.

What happens if you pass away?

If you die before you reach retirement age, this doesn’t mean your survivors can’t benefit from your 401K plan. However, you can take steps to ensure your retirement account is dealt with so that your loved ones gain access to your savings as efficiently and painlessly as possible.

Who can claim the money?

When you first opened your 401K account, you assigned primary and alternative beneficiaries for your 401K. Whoever you chose as your primary beneficiary will receive the money in your 401K account if you die before reaching retirement age.

How about cashing it out?

Of course, you can just take the cash and run. While there is nothing stopping you from liquidating an old 401K and taking a lump-sum distribution, most financial advisors caution strongly against it. It reduces your retirement savings unnecessarily, and on top of that, the IRS will tax you on the entire amount.

If you have a large sum in an old account, the tax burden of a full withdrawal may not be worth the windfall. Plus, you’ll probably be subject to the 10% early withdrawal penalty.

Note too that depending on the 401K company hosting your employer’s 401K, any monies matched by your employer might be deducted from the 401K’s total upon an early distribution.