Your 401(k) from an old job still belongs to you, and you can move or withdraw it at any point after you leave. Federal law protects your right to the vested portion, and your former employer cannot keep the money. You generally have four ways to take it out: leave it in the old plan, roll it into a new employer’s 401(k), roll it into an IRA, or cash it out. Which one makes sense depends on your age, your vested balance, and whether you actually need the cash right now.
Check Your Vested Balance First
Before you request anything, find out how much of the account is actually yours. Your own paycheck contributions are always 100% vested. Employer contributions — matching funds and profit-sharing — follow a vesting schedule, and if you left before you were fully vested, you forfeit the unvested portion.1Internal Revenue Service. Retirement Topics – Vesting
Your latest quarterly statement or the plan’s online portal will show your vested balance. That number is what governs your distribution — not the total balance shown on the account summary.
Your Four Options
Leave It in the Old Plan
If your vested balance is at least $7,000, the plan generally has to let you leave the money there.2Internal Revenue Service. Safe Harbor Explanations – Eligible Rollover Distributions You can’t make new contributions, but the investments keep growing tax-deferred. This is the easiest option if you like the plan’s investment lineup or aren’t ready to decide. The risk is losing track of the account after another job change.
Roll It Into a New Employer’s 401(k)
If your new job offers a plan that accepts incoming rollovers, you can move the balance in directly. The money goes trustee to trustee, so nothing is withheld and no penalty applies.3Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions Ask the new plan administrator whether rollovers are accepted before starting the paperwork.
Roll It Into an IRA
Moving the balance into an IRA gives you a much wider set of investment choices than any employer plan will offer. Traditional 401(k) money rolls into a traditional IRA; Roth 401(k) money rolls into a Roth IRA. Use a trustee-to-trustee transfer, where the old plan sends the funds directly to your IRA custodian. Nothing is withheld on a direct transfer.3Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
One warning if you’re 55 or older: rolling into an IRA can cost you a valuable penalty exception. More on that below.
Cash It Out
You can also take the whole vested balance as cash. The plan liquidates the investments, withholds taxes, and sends you the money. This closes the account. For anyone under 59½, cashing out is by far the most expensive path, and the tax math is worth understanding before you request it.
What Happens If You Do Nothing
If you never contact the plan, the outcome depends on the size of the account. A vested balance over $7,000 stays put until you decide. A balance between $1,000 and $7,000 can be pushed out without your consent, but the plan must roll it into an IRA on your behalf at an institution it chooses. A balance of $1,000 or less can simply be cut as a check, which triggers taxes and possibly the early withdrawal penalty.4Internal Revenue Service. 401(k) Resource Guide – Plan Participants – General Distribution Rules
Automatic rollover IRAs selected by a plan often carry higher fees and sit in conservative money market or stable value funds. Making an active choice is almost always better than letting the plan choose for you.
Taxes and the 10% Penalty
Any dollar you pull out of a traditional 401(k) is ordinary income in the year you receive it. How much you actually lose to taxes depends on how the money moves.
The 20% Mandatory Withholding
If the plan pays you directly instead of sending the funds to another retirement account, the administrator must withhold 20% for federal income tax — even if you intend to roll the money over later.4Internal Revenue Service. 401(k) Resource Guide – Plan Participants – General Distribution Rules On a $50,000 balance, you’d get $40,000 in hand. To roll over the full $50,000 within the 60-day window, you’d have to make up that $10,000 out of pocket. Whatever you don’t roll over becomes taxable income.
Direct rollovers skip this entirely. That’s the single biggest reason to move the money plan-to-plan or plan-to-IRA rather than accepting a check.
The 10% Early Withdrawal Penalty
Withdrawals before age 59½ generally get hit with an additional 10% penalty on top of income tax.5Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts Between withholding, your marginal rate, and the penalty, a cash-out can easily cost 30% to 40% of the balance.
A few exceptions eliminate the penalty, including total disability, substantially equal periodic payments, unreimbursed medical expenses above 7.5% of AGI, distributions to a former spouse under a qualified domestic relations order, and one emergency distribution per year of up to $1,000.6Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
The one most relevant to leaving a job is the Rule of 55. If you separate from your employer during or after the calendar year you turn 55, withdrawals from that employer’s 401(k) are penalty-free. It only applies to the plan at the job you left, not to IRAs or plans from earlier employers. If you’re 56 and considering a rollover to an IRA before drawing income, know that rolling in kills this exception. Once the money is in an IRA, you’d have to wait until 59½ or qualify under a different exception.
The 60-Day Rollover Deadline
If you take a check and decide to roll it over, you have 60 days from the date you receive it to deposit the full pre-withholding amount into a qualified plan or IRA.3Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions Miss it and the whole distribution is taxable, plus the 10% penalty if you’re under 59½.
If You Have an Outstanding 401(k) Loan
If you borrowed from the plan while employed, that loan usually comes due after you leave. Any unpaid balance is treated as a distribution, which means income tax and potentially the penalty.
You get more time than most people expect. A loan that becomes due because you separated is a qualified plan loan offset, and you have until your tax filing deadline for that year, including extensions, to roll the offset amount into an IRA or new plan.7Federal Register. Rollover Rules for Qualified Plan Loan Offset Amounts Leave a job in 2026, file with an extension, and you have until October 2027 to cover the loan balance and avoid the tax hit.
Making the Request
The actual process is mostly paperwork. Pull together your plan account number, the custodian’s contact information (usually Fidelity, Vanguard, Schwab, or similar — not your former employer’s HR department), and, for a rollover, the receiving institution’s name, address, account number, and account type.
Most custodians handle the whole request through an online portal. If you’ve lost your login, the participant services line is the fastest way in. Some plans still use paper: a Distribution Election Form for the amount and method, and IRS Form W-4R for federal withholding. The default rate on Form W-4R is 10% for nonperiodic payments, but you can pick any rate from 0% to 100%.8Internal Revenue Service. 2026 Form W-4R – Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions
Spousal Consent
If you’re married and the plan is subject to joint-and-survivor annuity rules, your spouse has to consent in writing, witnessed by a plan representative or notary, before you can take a distribution in a form other than the default annuity. Plans can skip this when the vested balance is $7,000 or less.9Internal Revenue Service. Fixing Common Plan Mistakes – Failure to Obtain Spousal Consent Not every 401(k) is subject to these rules. Your plan’s summary plan description will tell you whether spousal consent is required.
Timing
After submission, direct distributions usually process within five to ten business days. Rollovers to an outside institution can take two to three weeks because funds have to clear between two firms. Check that your Social Security number and mailing address are current in the system before submitting; a typo is the most common reason requests get rejected.
If You’ve Lost Track of an Old 401(k)
If you’ve moved through several jobs and can’t find an account, start with the Department of Labor’s Retirement Savings Lost and Found database. Created under the SECURE 2.0 Act, it lets you search for forgotten benefits from private-sector plans after you verify your identity through Login.gov.10U.S. Department of Labor Employee Benefits Security Administration. Retirement Savings Lost and Found Database
If that doesn’t find it, the Pension Benefit Guaranty Corporation lists other search tools including the National Registry of Unclaimed Retirement Benefits and the EBSA’s Abandoned Plan Program, which help with benefits from companies that were acquired, merged, or shut down.11Pension Benefit Guaranty Corporation. External Resources for Locating Benefits If you remember which firm managed the plan, calling the custodian directly and giving them your Social Security number often works too.