Changing Jobs: What to Do With Your Retirement Account

Depending on plan rules, you may leave money in the old plan, transfer it to an eligible new plan or IRA, or take a distribution. Cashing out can create income tax and additional tax on an early distribution unless an exception applies.

A direct rollover sends eligible retirement funds to the receiving plan or IRA. If an eligible employer-plan distribution is instead paid to you, federal withholding generally applies. Completing a full rollover may require replacing the withheld amount.

An indirect rollover generally must be completed within 60 days of receiving the distribution—not 60 days after leaving a job. Some distributions cannot be rolled over. Ask both providers to confirm the destination, pretax/Roth treatment, and processing steps.

For a $10,000 eligible plan distribution paid to you with $2,000 withheld, rolling over only the $8,000 received generally leaves $2,000 outside the rollover. A direct rollover avoids this cash-replacement problem.

• Plan statements and fee information
• Receiving account instructions
• Distribution and rollover confirmations
• Forms 1099-R and 5498 when issued

• IRS rollover rules
• IRS: termination of employment

• Traditional vs. Roth IRA: Understanding the Tax Differences
• Retirement Withdrawals and Required Distributions