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That depends on what you
decide to do with your 401(k) money. You have several options:
A. If your vested account balance is $5,000 or more and you're under age 65, you can leave
your money in your company’s 401(k) plan even when you no longer work there –
and taxes won't be due until you withdraw money from the plan.
B. You can roll over your 401(k) into a rollover IRA account or into your new employer's
401(k) plan. If you do a direct rollover – have the money transferred directly into
the new account – you won't owe taxes until you withdraw money from the account.
C. You can elect to take your money out of the 401(k) and not roll it over into a rollover
IRA or another 401(k) plan. In this case, you will owe all applicable taxes plus the 10%
early withdrawal penalty (if you are under age 59 ý) on your income tax for that year. |
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