If you got laid off, how would you handle your 401k? Are there rules that need to go about?
10 replies (most recent on top)
I’m spending mine on gold chains and snowmobiles.
@a2
Fidelity to Fidelity is done electronically these days.
Ask about moves to other companies, like Vanguard.
I’d note, any 401k loans will need to be paid back in lump sum or payment plan via bank ACH payments similar to the deductions from your regular pay.
I will spend on jewelry and go to
Casino.
If you are a high earning household, do NOT roll it over. Keep it in the 401k. If you roll it over, it’s going to makes it very difficult to contribute to a backdoor Roth IRA.
Google backdoor Roth for more info.
@OP No, you DO NOT roll it over to A NEW JOB's 401k. You can leave it in Fidelity, or, as we suggested, have it transferred to your own IRA either managed by your retirement company, if you have one, or a separate IRA you may open on your own. Although, if you don't have a money management firm planning for your retirement, you can just let Fidelity manage that for you. If you start a new job, you will, if they offer it, enroll in THEIR 401k plan. I doubt they would let you roll your own funds into those as many times they have specific company related investments funds to allow them to match your contribution. Once you pull it out of a 401k, it needs to follow specific rules to ensure you don't incur taxes, so a check would be drawn into a qualifying IRA plan. Talk to your accountant or hire one for a consultation to be sure before you do any moves out of Fidelity.
- Leave it in Fidelity.
- Rollover to an IRA.
- Rollover to new employer's 401k.
If you've done or plan to do backdoor ROTH in 2025, don't do option 2, as you'll have to pay taxes on the contributions.
@a2 Make sure the check is NOT in your name, cause then you will have a penalty and have to pay taxes. Triple check with HR that the name on the check will be for the Brokerage (like Fidelity).
If you don’t do anything with it, it will sit where it’s at. You can roll it over to another company/brokerage when you get a new job. Process is pretty painless, usually done in a week or less depending on rules. When I was laid off, Verizon 401k didn’t allow electronic transfer even though I was going Fidelity to Fidelity. They will mail you a check made out to the new brokerage and you mail it to the new brokerage.
Move it to an IRA