Is it better to roll over an old 401(k) into an IRA or a new employer’s 401(k)?

It depends. Rolling into a new employer’s 401(k) can simplify your accounts, while rolling into an IRA can offer more investment choices and flexibility. Comparing fees, investment options, and your long-term goals can help determine the best fit.

Can I cash out my old 401(k)?

You can cash it out, but it’s usually a costly move. Cashing out before age 59½ can trigger taxes and a 10% early withdrawal penalty, significantly reducing your savings. Most experts recommend considering rollovers or leaving the account where it is instead.

How can Halter Ferguson Financial help with my old 401(k)?

At Halter Ferguson Financial, we help clients evaluate their 401(k) rollover options based on their individual retirement goals. Whether it's rolling over to an IRA, consolidating accounts, or creating a personalized investment strategy, we make the process clear, simple, and customized to your needs.

What to Do With Old 401(k)?

Q: What should I do with my old 401(k)?

When you leave a job, you have a few options for your old 401(k): leave it in the old plan, roll it into your new employer’s plan, roll it into an IRA, or cash it out. Each option has pros and cons depending on your financial goals. Speaking with a financial advisor can help you make the right decision.

HFF Staff Writer
Apr 30
3 min read

Man in blue shirt looks concerned, reading a "401(k) Account" document at a table. Laptop nearby, home setting with bookshelf behind.

If you’ve ever changed jobs—whether it was a big career move or a “get me out of here” situation—you’ve probably asked yourself a pretty common question: What should I do with my old 401(k)?

And if you're like most people, it’s easy to let that question slide into the "I'll deal with it later" pile. (Right next to cleaning out the garage and finally learning how to make sourdough bread.)

But here’s the thing: ignoring an old 401(k) can cost you. Big time. Fees, missed opportunities for growth, even forgotten accounts—you name it. So let’s walk through your options, break it down simply, and help you figure out the right next step.

First Things First: Don’t Panic

It’s surprisingly common to have an old 401(k) floating around. In fact, a study by Capitalize estimated that Americans have over 29 million forgotten 401(k)s out there, worth nearly $1.65 trillion. (Yes, trillion with a "T.")

So, if you’re sitting there wondering what happened to that retirement account from your first job after college... you’re not alone.

The good news? You’ve got a few solid options.

Your Main Options for an Old 401(k)

Let’s make this simple. When it comes to what to do with an old 401(k), you generally have four paths:

1. Leave it where it is

Some plans let you keep your 401(k) even after you leave the job. If the plan is well-managed, low-fee, and offers good investment options, leaving it alone might make sense.

But be honest with yourself: will you actually keep tabs on it? If it's out of sight, it often ends up out of mind—which means you might miss chances to rebalance, adjust, or optimize your investments.

2. Roll it over into your new employer’s 401(k)

If your new job offers a solid 401(k) plan, you might be able to roll your old one into it. This can make your life easier by consolidating accounts—fewer logins, fewer statements, fewer things to forget about.

Quick heads-up: Make sure the new plan’s fees and investment choices are decent before you make the move. Not all 401(k) plans are created equal.

3. Roll it over into an IRA

If you want more control over your investments, rolling your old 401(k) into an Individual Retirement Account (IRA) could be a great move. IRAs often have a wider range of investment options than employer-sponsored plans, and they give you flexibility to work with an advisor (like us!) to tailor a strategy to your specific goals.

One note: If you go this route, be sure to do a direct rollover—meaning the money goes straight from your old plan into the IRA. That way you avoid any unnecessary taxes or penalties.

4. Cash it out

Technically, you can cash out your old 401(k)... but unless you really, really have no other option, it’s usually a terrible idea.

Here’s why: If you're under age 59½, not only will you owe income taxes on the full amount, but you'll also get slapped with a 10% early withdrawal penalty. Ouch.

Example: If you cash out a $50,000 401(k), you could easily lose $15,000–$20,000 of it to taxes and penalties. That’s like giving away a brand-new car. Probably not the best financial move.

So, How Do You Decide?

Here’s a quick gut-check guide:

If your old plan is excellent and you don’t mind monitoring it—you might leave it.
If your new employer’s plan is great and you want simplicity—rolling into the new 401(k) could work.
If you want full control, better investment choices, and more flexibility—an IRA rollover is probably your best bet.
If you’re thinking about cashing out... please call us first. Seriously.

Everyone’s situation is a little different. Your age, income, investment goals, and future plans all factor into the right choice. That’s why it’s worth taking a little time—and maybe getting a second opinion—before deciding.

Don’t Leave Your Retirement in a Junk Drawer

Here’s the big picture: your old 401(k) isn’t just some random account. It’s your hard-earned money, your future freedom, your chance to retire comfortably (and maybe even a little early).

It deserves more than being forgotten like an old set of house keys you found in the back of a drawer.

At Halter Ferguson Financial, we help clients take smart, simple actions with their retirement accounts every day. Whether you’re rolling over an old 401(k), fine-tuning an IRA, or building a comprehensive plan for retirement, we’re here to guide you—without jargon, without stress, and without one-size-fits-all advice.

Ready to make the most of what you’ve already saved? Contact us today to talk with a real advisor who’ll help you figure out the best next step.

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