If you don't know what to do with your old 401k, listen up! I am so excited about this because 401ks are one of the best saving tools available to Americans. In fact, it's usually the first account where millionaires cross that elusive

seven-figure status. As a short refresher, a 401k is what's known as a tax-advantaged, employer-sponsored retirement account. All that means is that contributing to a 401k comes with certain tax incentives and that the account is offered by your employer.

Here's the catch: when you leave that employer, you have to know what to do with the account, and a lot of people mess this up, and it can cost them big time, both now and in the future. One thing that won't cost you big time, though, is hitting that subscribe button.

in fact, it costs you nothing at all. So hit it if you haven't already, and let's dive in. [Music] Before we talk about what to do, there's one thing that, in 99.9% of situations, you should absolutely not do.

All right, come here, a little bit closer, a little bit closer. Do not, I repeat, do not cash it out! Don't do it! This may seem like a good way to get cash in hand quickly, but more likely than not, it will blow up in your face. It can cause you

huge problems. For anyone under the age of 59 and a half, cashing out of a 401k triggers an immediate 10% penalty, and regardless of your age, you have to pay taxes on those funds. That means a huge amount of the sacrifice that you made to

save those dollars is immediately evaporated, gone, reduced to atoms. There is an exception to this rule for hardship withdrawals that meet a specific set of criteria as established by the IRS, but these situations are quite rare. And yet, 41% of employees cash out their 401(k)

when leaving a job, and of those, 85% drain the entire balance as though it were just found money. As a financial advisor, for us, that is DEFCON 1, alarm bells ringing, get to the lifeboats type situation. Cashing out of a 401(k) should

only be done as a last resort, a break-glass provision. Now, you might be watching this because an old employer has cashed out an old 401(k) for you, and now you're freaking out, or you're just going to get hit with taxes and penalties just for leaving a job. The

short answer is no. If a former employer does this, they'll issue you a check called a forced plan distribution, and you have 60 days to deposit that check into an acceptable account. Don't worry, we're going to go over all of that in this video. So, when it comes to what you

personally should do with your old 401(k), only you can make that determination, but there are a few things that you should consider. You need to know the balance of your old 401(k). If it's over $7,000, you can just leave it at your old employer.

This can be a great option for a few reasons: it's easy, it allows you to keep the investment options that are already in the plan if you like those options, and you don't have to worry about consolidating the accounts or doing a rollover into a new plan. By the way,

Rollover is just a fancy word for transferring funds from an old 401(k) into a new eligible account, and we'll get to that shortly. If the balance is less than $7,000, uh, you're not happy with the investment options in your old 401(k), or

you're wanting to consolidate accounts to simplify your portfolio, you'll have to answer some questions specific to your situation first. If you don't have access to a new plan, or the options in your new plan are less than ideal, rolling the funds over into an IRA will

likely be the best way to go. But if you do have a new plan, and it's one with really good options, the decision is a little more nuanced. If this is the case, you'll need to decide whether to roll it into your new 401(k) or into an IRA. You

may lean towards the IRA if you want more flexibility and freedom with the investment options, or if you don't want to have to worry about the rollover provisions after changing jobs in the future. You may lean towards the 401(k) option if you're retiring early, and

that's a priority, or if you want to do backdoor Roth conversions in the future, but that's, again, for a separate video. And no matter which of these options you pick, 401(k) or IRA, it is crucial that you actually invest the dollars. Vanguard found that nearly 30% of 401(k) rollovers

are left in cash for over a year, and those same accounts are more than likely to be left in cash for more than seven years. Think about how much money that costs you! It literally makes my skin crawl. Even if that money had just been invested in low-cost index funds, and...

years, it had the potential to double, but instead, it just sat there collecting dust, losing purchasing power because of inflation, sitting there wondering, "Will I ever be invested again?" Don't let that be your situation. No matter what you're doing with your old 401(k), if you're

starting a new job that offers a 401(k), you might also need to set up your new contribution amounts and investments. If that's the case, please, please consider setting up your new plan contributions to get your full employer match. Whatever that is, it's free money. According to

Fidelity, one in four Americans are not getting their full employer match. That is literally a guaranteed 50%, or maybe even 100%, return on your money. And yet, a quarter of Americans are saying, "Nah, I'm good. I don't like free money." That is

hogwash. Take an active role in your finances and put your dollars to work. Get your full employer match; invest those dollars. If you want all of this information in one place, we have a free flowchart on how to assess your 401(k) situation at moneyguy.com/

resources. Be sure to check it out. Oh, and by the way, subscribe if you haven't already. [Music]

What To Do With Your Old 401(k)

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401k에 대한 소개와 퇴사 후 관리의 중요성에 대해 알아보세요.

401k는 귀중한 저축 도구이며 백만장자가 7천만 달러에 도달하는 첫 번째 계좌이기도 합니다.

401k는 세제 혜택이 있는 고용주가 후원하는 퇴직 계좌입니다.

많은 사람이 직장을 떠난 후 401k를 관리하는 데 실수를 합니다.

피해야 할 가장 큰 실수는 401k를 조기에 현금화하는 것입니다.

59 1/2 이전에 401k를 현금화하면 10%의 벌금과 세금이 부과됩니다.

이렇게 하면 누적된 저축액이 크게 줄어듭니다.

놀랍게도 많은 사람들이 벌금에도 불구하고 직장을 그만둘 때 401k를 현금으로 인출합니다.

기존 401k 및 사용 가능한 옵션을 어떻게 처리해야 할까요?

잔액이 7,000달러를 초과하는 경우 이전 고용주에게 맡길 수 있습니다.

이 옵션은 기존 투자를 유지할 수 있는 간단한 옵션입니다.

이월이란 새로운 적격 계정으로 자금을 이체하는 것을 의미합니다.

잔액이 7,000달러 미만이거나 더 많은 관리가 필요한 경우 IRA 또는 새 401k로 롤오버하는 것을 고려하세요.

이월된 자금을 투자하고 고용주 매칭을 극대화하는 것의 중요성.

많은 사람이 이월 자금을 현금으로 남겨두어 잠재적 이익을 잃고 있습니다.

새 401k에 충분히 불입하면 고용주 매칭금을 전액 받을 수 있으며, 이는 사실상 공짜 돈입니다.

401k 상황을 평가하는 데 도움이 되는 무료 순서도를 온라인에서 확인할 수 있습니다.