What Should I Do With My 401(k) Before Retirement?
Your 401(k) may be one of your largest retirement assets. Whether the balance is $100,000 or $1 million, the next step should follow a comparison of your choices and your income plan.
Compare the Available Options
After leaving an employer, you generally may leave eligible assets in the existing plan, roll them into a new employer’s plan if it accepts rollovers, roll them into an IRA, or take a distribution. Availability depends on plan rules. A distribution can create taxes and, depending on your circumstances, additional tax. See the IRS guide to leaving employment.
Do Not Treat a Rollover as Automatic
Ask what you would gain and what you might give up. Compare investment choices, total fees, services, distribution flexibility and the protections or features of each account. An IRA may offer different choices, but a workplace plan may have features you value. An adviser’s recommendation should explain the reasons for moving or retaining assets.
Understand How Money Will Move
For an eligible direct rollover, the plan sends the payment to the receiving plan or IRA rather than paying it to you. If an eligible taxable employer-plan distribution is paid to you, mandatory withholding generally applies and a 60-day rollover deadline can matter. A Roth conversion may create taxable income even when funds move directly. Consult your tax professional before giving instructions. See the IRS rollover guidance.
Connect the Account to Your Retirement Plan
- What annual spending will the account help fund?
- How will Social Security, other savings and any pension work together?
- When will you need withdrawals, and how much investment risk is appropriate?
- How do taxes and beneficiary choices affect your plan?
Gather your plan’s fee information, investment menu and distribution rules before making a decision. A clear comparison is more useful than choosing an account based only on its name or balance.
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Educational information only, as of October 2026. This is not a recommendation to roll over an account or individualized investment, tax or legal advice. Consult your plan administrator and qualified tax or legal professionals. Investing involves risk, including possible loss of principal.