Leaving your old job? Here’s what to do with your 401k

As of July 2025, an estimated 31.9 million 401(k) accounts had been left behind by people who changed jobs, holding about $2.13 trillion in assets, according to research from Capitalize. That is close to a quarter of all money held in 401(k) accounts, and the average left-behind account holds about $66,700.

Life happens in chapters. And sometimes, a new chapter involves getting a new job or losing your current one. There can also be some cliffhangers from the preceding chapter, but one thing to not leave behind is the money you had saved for retirement with that employer through your 401(K) plan.

What’s a 401(k)?

A 401(k) is a type of retirement savings account that an employer sponsors–so, only employees of a company that offers one can contribute. Employees who enroll in a company’s 401(k) plan automatically contribute money to an account through payroll deductions.

There are two different types of 401(k). One is called a traditional 401(k) and the other is called a Roth 401(k).

You usually fund a traditional 401(k) with pre-tax earnings, which is the gross pay you earn each month before taxes and other deductions have been taken out. By contrast, you usually fund a Roth 401(k) with post-tax earnings, known as your net income. This is the money you take home after taxes and other deductions have been taken out.

There is an annual contribution limit of $24,500 for individuals under the age of 50, and $32,500 for those over 50 as of 2026. This is an increase from the previous year, which had an annual contribution limit of $23,500 for those under 50 and $31,000 for those over 50. Contributions over these limits are subject to income taxes.

Some employers also offer matching contributions, which means that a company will match the funds an employee contributes to a 401(k) every pay period, usually up to a certain percentage, for example up to 3% of your contribution.

What you can do with your old 401(K)

You can rest easy, because your money isn’t going anywhere—it’s your money, and you have control over what happens to it. And you have several options to choose from.

Option 1: Leave the money in the current 401(K) plan

If your balance is above $7,000, your old plan generally has to let you leave the money where it is. Below that, the plan may move it out without asking you: balances between $1,000 and $7,000 can be automatically rolled into an IRA, and balances under $1,000 can be paid out to you directly, which may trigger taxes and penalties. Your plan documents govern, so check them or contact the plan administrator.

If you leave the money in place, you generally can’t make additional contributions to that account once you no longer work for the company that sponsors the plan.

Option 2: Take a taxable distribution

While this is an option, it is not recommended unless you’re facing a financial hardship that your emergency fund can’t cover. You have the ability to “cash out” your 401(K) account, but you’ll be subject to taxes and early withdrawal fees on the balance, depending on your age. If you’re under age 59½, early withdrawal penalties can be as high as 10%, and the income tax due will depend on your federal and state tax brackets.

Option 3: Roll the funds over to your new employer’s 401(k) plan

If you’re offered a 401(k) plan at your new job, you can set up a 401(k) rollover transfer from your old provider to your new one. Depending on your provider, you may be able to initiate the transfer online—or, your old provider may send you a check with the funds that you must deposit into your new account.

Option 4: Roll the funds over to an IRA with a 401(K) rollover

You can initiate a 401(k) rollover into a traditional IRA. This is the most popular method because you get to choose the financial institution and you have more flexibility and control over what your investments are. Many people see leaving an old employer as an opportunity to get your money out of a 401(K) and into an IRA where you have more control and it’s more tax efficient.

To do this, you’d choose an IRA provider and open an account, and then ask your 401(k) provider to roll over the funds into your new account. 

If Stash is your IRA provider: eligible customers can start a 401(k) rollover in the Stash mobile app. Our partner Capitalize works with your previous provider to handle much of the paperwork and follow-up. Stash does not recommend whether or not you should roll over retirement assets.

The best move will depend on your individual situation. But even if you do find yourself without a job, try your best to keep saving—it’s tough to play catch-up when it comes to your retirement savings.