Almost every family we work with had, at some point, at least one 401(k) sitting at a former employer that they "kept meaning to consolidate." Sometimes for ten years.
Your options when you leave a job
- Leave it where it is. Sometimes fine. Often forgotten.
- Move it to your new employer's plan. Possible, but new plans aren't always better.
- Roll it over to an IRA. Most common. Gives you full investment control.
- Cash it out. Almost never the right move, you'll pay tax and (if under 59½) a 10% penalty.
How a rollover works (and why people get it wrong)
- Direct rollover (recommended): trustee-to-trustee. No tax withholding, no 60-day clock.
- Indirect rollover: a check is mailed to you and you have 60 days to deposit it. 20% mandatory withholding. Easy to mess up.
- Other pitfalls: rolling pre-tax dollars into a Roth without realizing it, leaving company stock when NUA treatment would have saved tax, missing the 60-day window.
What we do
- Inventory every old account.
- Confirm what's pre-tax, Roth, and any company stock with potential NUA treatment.
- Coordinate the rollover paperwork with the former custodian and Schwab.
- Build the post-rollover allocation around your overall plan.
- Coordinate with your CPA on tax reporting.