Dimplo one-page planning tool
An old 401(k) does not need an automatic answer. Use this worksheet before you choose among leaving the account in the former employer's plan, moving it to a new plan, moving it to an IRA, or taking a distribution.
Use this before starting paperwork. This is educational planning support, not personal tax or investment advice. Do not enter account numbers here; print the page or use a private note.
1. Collect the facts that can change the decision
| What to find | Your answer | Why it matters |
|---|---|---|
| Plan name and former employer | ________________ | Lets you request the correct rollover packet and fee disclosure. |
| Pretax balance / Roth balance / after-tax balance | ________________ | Different money types may need different destinations. |
| Current plan fees and fund expenses | ________________ | Compare the real costs of the investments you would actually use. |
| New employer plan accepts rollovers? | Yes / No / Ask | Not every plan accepts incoming money. |
| Age when you left the employer | ________________ | Leaving in or after the year you turn 55 can affect the early-distribution-tax exception for that plan. |
| Employer stock, plan loan, or special fund? | ________________ | These can introduce rules that deserve a professional review before a rollover. |
2. Compare the four real choices
| Choice | May deserve a closer look when... | Check before deciding |
|---|---|---|
| Leave it in the old plan | The plan has unusually low fees, strong institutional funds, stable-value access, or withdrawal features you want to preserve. | Whether the plan permits former employees to stay, its fees, service quality, and access rules. |
| Move it to a new employer's plan | You prefer fewer accounts and the new plan is low-cost and accepts rollovers. | Fund menu, plan fees, creditor protections, loan rules, and whether the plan accepts your money types. |
| Roll it to an IRA | You need broader investment choice, simpler management, or an advisor/custodian arrangement that clearly improves the outcome. | Total fund and advisory costs, withdrawal planning, and whether moving money could affect an age-55 access strategy. |
| Take a cash distribution | You have a narrow, deliberate reason and understand the tax cost. | Current income tax, possible additional tax before age 59 1/2, loss of retirement savings, and the 20% withholding rule. |
3. The 60-second decision screen
- Do I need this account for planned access before age 59 1/2? If you left that employer in or after the calendar year you turned 55, pause before moving all of its money to an IRA. The plan's distribution rules still matter.
- Does the old or new plan have a clear advantage? Write the specific advantage: lower all-in cost, a better fund, easier consolidation, special withdrawal features, or something else tangible.
- Can I describe the tax destination for every dollar? Pretax 401(k) money generally belongs in a pretax destination unless you intentionally choose a taxable Roth conversion. Do not let a form decide this for you.
- Am I comparing the account I will actually use? Compare the one or two funds, services, and fees you would use, not the number of choices on a marketing page.
4. If you move it, use a direct rollover checklist
A direct rollover is normally the cleanest route: the old plan sends the money directly to the receiving plan or IRA, or issues a check payable to the receiving institution. The IRS says this avoids the mandatory 20% withholding that generally applies when an eligible employer-plan distribution is paid to you.
- Open or confirm the receiving IRA or employer-plan account first.
- Ask the receiving institution for exact rollover instructions and check-payee wording.
- Ask the old plan to send a direct rollover, not a distribution payable to you.
- Confirm how pretax, Roth, and after-tax amounts will be handled before signing.
- Save the final statement, transfer confirmation, and year-end tax forms.
5. Do not skip these two flags
| Flag | Why to slow down | Next move |
|---|---|---|
| A check is payable to you | An employer-plan distribution paid to you is generally subject to 20% mandatory federal withholding, even if you intend to roll it over within 60 days. | Ask whether it can instead be reissued as a direct rollover. If it cannot, understand the replacement-cash requirement before acting. |
| Employer stock in the 401(k) | Company stock can have special tax treatment. A routine rollover may not be the only path worth evaluating. | Get plan records and discuss the alternatives with a qualified tax professional before moving the shares. |
| You left at 55 through 59 | The early-distribution-tax exception connected to separation from service applies to qualified plans, not IRAs. | Ask the old plan about partial withdrawals and do not assume an IRA preserves the same access. |