StashLearn
Get the app
Get the app

Join millions of investors on Stash

Investing, simplified

Start today with as little as $5
Get the app
Teach Me

What Happens to Your 401(k) When You Leave Your Job?

October 10, 2018

Quitting? Fired? What about your 401(k)? We explain.

3 min read

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—like what should you do with your retirement accounts, such as a 401(k) from your old job.

What’s a 401(k)?

A 401(k) is a type of retirement savings account that is sponsored by an employer–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), 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 $18,500 for individuals under the age of 50, and $24,500 for those over 50, as of 2018. 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.

Employment and your 401(k)

To reiterate, you can’t contribute to a 401(k) unless your employer offers one. That doesn’t’ mean you can’t save for retirement—in that case, you can open an individual retirement account or IRA.

But what happens to your 401(k) if you lose your job, or change jobs?

What happens to your 401(k) when you leave your job?

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.

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.

Make your future money

Learn more about Stash Retire

Start now

By Sam Becker

Next for you
Introduction to Retirement

Investment Profile

Bonds Worldwide

An International Bond ETF on Stash

Learn more
Explore more articlesChoose a topic to learn more about
pop culture Retirement love and money social media politics
Disclaimers

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.