When you leave your job, you have a few options for what to do with your 401k. You can cash it out, leave it with your former employer, or roll it over into an IRA.
Cashing out your 401k
If you cash out your 401k, you will have to pay taxes on the amount you withdraw. You will also be subject to a 10% early withdrawal penalty if you are younger than 59½.
Leaving your 401k with your former employer
If you leave your 401k with your former employer, your money will continue to grow tax-deferred. You will be able to access your money when you retire.
Rolling over your 401k into an IRA
If you roll over your 401k into an IRA, you will have more investment options and flexibility. You will also be able to take advantage of catch-up contributions if you are over 50.
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