by KYW's Salil Gutt
Job changes necessitate an important financial decision. What to do with the money in 401k or similar employer sponsored retirement plans. Here are some choices.
Leave as is. There is no rule which mandates you must move the money out of the existing plan. So if your current plan has good investment choices that may not be available elsewhere leave the money as is. For instance, some plans have mutual funds which are closed to new investors. You will be shut out of these funds if you transfer.
Alternatively you can do a direct and tax free transfer to a rollover IRA. One disadvantage is borrowing for hardship and loans are not permitted. However, you can preserve these features by opening what is known as a conduit IRA. 401k money is parked here temporarily until you are able to transfer to a new employer's 401k plan.
Finally. The least desirable option is to take the money in a personal rollover. The distribution check is cut to you but your employer must withhold 20% of the distribution in federal taxes. You have 60 calendar days to deposit the full distribution (including the amount withheld) into an IRA.
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