Managing retirement savings from multiple jobs

If you’ve saved some money in your workplace retirement plan, you may be wondering what to do with it if you move from one job to another.
Moving that money into an Individual Retirement Account (IRA) can be an easy way to manage your retirement savings from your past — and future — jobs in one place.1

When you leave a job, you generally have four things you can do with your retirement savings:
  • Leave the money in your old employer’s plan
  • Roll it over1 to your new employer’s plan (if that’s allowed)
  • Roll it over to a new IRA
  • Cash out of the plan and get your money immediately
While getting immediate access to your money is tempting, you’ll face tax penalties for cashing out early. Those penalties could eat up as much as 40% of your savings. For example, if you cashed out $5,000 of your savings from a 403(b) plan, you could be left with as little as $3,000.
Can I leave it where it is?
There may be some advantages to leaving money in your old employer’s plan. For example, you could pay less in mutual fund fees through an employer’s plan than if you invested in those funds with an IRA.
However, by leaving the money in the prior employer’s plan, you risk having your retirement money scattered with more than one old employer over time as you switch jobs. Also, you won’t be able to put aside more money into these accounts, and where you can invest that money is limited to the investment choices offered by your old employer.
What about a rollover?
You need to weigh the pros and cons to leaving the money where it is or rolling it over. One advantage of rolling funds into an IRA is you can create a “home” for all your rollover assets from future jobs, making it easier to manage your funds.
Be sure to discuss your options with a TIAA consultant and your tax advisor.
1Prior to rolling over, consider your other options. You may also be able to leave money in your current plan, withdraw cash or roll over the assets to your new employer’s plan if one is available and rollovers are permitted. Compare the differences in investment options, services, fees and expenses, withdrawal options, required minimum distributions, other plan features, and tax treatment. Speak with a TIAA consultant and your tax advisor regarding your situation. Learn more.

This material is for informational or educational purposes only and does not constitute a recommendation or investment advice in connection with a distribution, transfer or rollover, a purchase or sale of securities or other investment property, or the management of securities or other investments, including the development of an investment strategy or retention of an investment manager or advisor. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made in consultation with an investor’s personal advisor based on the investor’s own objectives and circumstances.