### Managing Your 401(k) After Leaving the Workplace

Tristan must consider options for his 401(k) now that he's leaving work for his new baby.

### Navigating Your 401(k) Options After Leaving Work for Family
* 👶 Tristan is transitioning to stay-at-home parenting and is concerned about his **401(k)** after leaving his job, prompting a discussion on available options for **managing retirement funds**.
* 📄 A new resource is available at moneyguy.com, which outlines steps for **handling old 401(k) accounts**, specifically tailored to questions like Tristan's.
* 🚫 One option that is not advisable is to **cash out the 401(k)**, as it often leads to **unfavorable tax consequences and penalties**.
* 🏦 The first permissible option is to **leave the 401(k) with the current provider** if it offers a **solid plan**, especially with **reputable companies**.
* 🔄 Alternatively, Tristan can roll his 401(k) into a new employer's plan if he finds it **more beneficial than his old one**, ensuring he maintains **employer contributions**.
* 💼 If neither option is suitable, rolling the 401(k) into a rollover IRA provides **greater control over investments and fees**, although it may affect **backdoor Roth contribution strategies**.
* 💰 It's crucial to be aware of the plan's **asset threshold**, typically around **$5,000**, as plans may **force a distribution** if the balance falls below this amount.
* 🎉 The conversation concludes with congratulations to Tristan on his new journey as a parent, emphasizing the **importance of considering financial implications** during such life changes.

[Music] Tristan has a question. He says, "Currently leaving the workplace to stay at home with a new baby. What happens to my 401(k)? Is there an additional step I need to take if I'm not going to return to work?" I thought that was an interesting question.

So, all right, you're leaving your job. What happens to the 401(k) now? What should you do? What should you think about? Is that deliverable have thing is ready? Oh, look, it is! Oh, it's up, money.com resources. So, it's almost like we that's we, so you didn't even mean to mean to ask this question off, so we have no, honestly, this was not strategic. We have a brand new deliverable that, if you've not seen it, you can go out to moneyguy.com resources and download it. It's so new, I don't even know the name of it, but it's basically walks you through what to do with an old 401(k), walks you through what to do with old retirement accounts because that's the exact question Tristan is

facing. What do I got 401(k)? Here's what to do with it. How do I know what I can do? You can go download this deliverable, Tristan, and it'll be very, very helpful for you. But essentially, when it comes to

401(k)s, there are four things that you can do, but I'm going to put one down because one of them is not an option. That one that's not an option is cash it out. You've heard us say this before: Don't do that, even though they tell you, "Hey, do

You want to distribute this money, hey, do you want to have mandatory withholding done? You don't want to do that, so then the question becomes, okay, well what do I do? And there are three permissible and allowable things that you can do with a 401(k). Brian, you want to walk them through

those three things that they can do once they leave? Well, you can actually just stay right where you are if you like your 401(k), you like the provider, especially if you work for a big national public company and they're working with one of the big providers

out there, it's probably a pretty jam-up plan. So you, you can leave it right where it is. There's also the option that you could, if you wanted to, you could roll it into your brand new plan. Maybe you went from a plan that was set up by the owner

of the company's college roommate or golf buddy, and it's not that good, and you're like, man, I've never liked my 401(k), but I like the free money that they're putting in, but I've gone to this new company, and man, they seem to have their

act together on 401(k) designs. So why not roll the old plan, do a trustee-to-trustee transfer into the brand new plan? And then the, the last option that B is alluding to, that's why I want you to look at those first two F, you know, as options

is because they allow you to keep the backdoor Roth contributions available. Um, but if those, if it doesn't work out, you don't like the plan, you don't like your new plan, you can always roll it into a rollover IRA. That way you don't

have to be stuck with the choices that your old plan provider had made you know you now get to choose the investments you get to choose what fees you're paying inside of the plan it's it's a lot more control but it does blow up up

that opportunity to do um a backdoor or Roth conversion strategy if you make too much money to do Roth contributions directly so if you've not checked it out make sure you go to moneyguy.com resources check out that brand new deliverable and let us know what you

guys think is this valuable is this helpful and congratulations on being able to go stay home with a new baby that like an amazing thing so that's an awesome transition that you're making and I think it's wonderful that even as you're making this transition you're

thinking through the other financial implications of that decision and I think this is on the deliverable but it's worth saying out loud for all those that just don't make it to the resource page is that the threshold and Bo you can correct me it used to be $5,000 if your

plan is less it's plan specific so it depends on how it's written the make sure you understand what the threshold of assets has to be for you to allow to stay in the plan there are you know in the past there's been provisions usually

less than $5,000 that they'll just kick your assets out essentially you'll get a check in the mail they'll um what y'all all heard it right it wasn't just me they'll do the withholding on it you'll just get a

check in the mail and then you'll get a nasty surprise when you, you know, get that 1099-R at the year end and you file your taxes. This, this is why I guess I'm made for content. It was awesome that my brain just throws stuff out and somehow

it's quirky enough that you guys get entertained by what did, what did I say? You said it and it'll just kick your assets out and we're like, oh, oh no, no, he was literally saying, literally it'll, it'll force your ass out. It was great. We

thought you were maybe going to, you can either, you can, you know, some people, you know, I remember Little League baseball. Now this was short-lived, um, because I grew up left-handed. Oh well, that I would have played. I got picked up and in 910

baseball as a pitcher because my, when I was a pitcher in 910 league ball, my ball naturally had a curve to it. Yeah, all because I was left. It's not like I was trying to throw a curveball, it's just the way as a southpaw I was throwing the

ball. I feel like that's the way the English language works for me is that I, you know, I'm, I'm trying to navigate this thing. I'm just throwing out the words that my brain gives me and somehow it comes out in unique ways that people are

entertained. So, you're the left-handed pitcher of the English language. I love it. Didn't even try to be a poet, didn't know it, or a comedian, didn't know it. That doesn't rhyme though.

How To Stop Working The Right Way

Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life.

Subscribe today to stay up to date with our latest episodes, livestreams, and highlight videos: https://www.youtube.com/c/MoneyGuyShow?sub_confirmation=1

Are you ready to go beyond common sense when it comes to your money? Check out all the free resources The Money Guy Show provides: https://moneyguy.com/resources/



The Money Guy Show

Question about 401(k) after leaving employment to care for a newborn.

Inquiry regarding 401(k) management after leaving a job to stay home with a baby.

Announcement of a new downloadable resource on moneyguy.com addressing 401(k) and retirement account management.

Overview of options for handling a 401(k) after leaving a job.

Strongly advising against cashing out a 401(k).

Three permissible actions for a 401(k) upon leaving employment.

Option 1: Leaving the 401(k) with the current provider, especially if it's a well-managed plan.

Option 2: Rolling the 401(k) into a new employer's plan if it's superior.

Option 3: Rolling the 401(k) into a rollover IRA for greater investment control.

Note about the impact of rollover IRA on backdoor Roth conversion strategies.

Considerations regarding plan-specific asset thresholds and potential consequences.

Mention of a threshold (often under $5,000) that may trigger automatic distribution of assets.

Explanation of the process when the asset threshold is met, resulting in a check and potential tax implications.

Highlighting the surprise tax implications (1099-R) from unexpected distributions.