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401(k) still at your old job? Here are your options.

There's a lot to take care of when you leave a job behind, but you shouldn't forget your 401(k).

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When you leave a job, there’s a lot to take care of — not least of which is starting (or finding) your next job. In the buzz of activity surrounding this big life change, it may be easy to put the old job and everything associated with it out of mind. But there’s one important thing you shouldn’t let yourself forget: your old 401(k) account.

While you shouldn’t cash out your 401(k) until you’re ready for retirement, it should still be invested and managed wisely. Many workers are not aware that by doing nothing with their 401(k), they could be losing money to high management fees and hidden costs. Inflation can also lower the actual value of the account over the years.

Let’s take a look at your options for your 401(k) after leaving a job.

1. Leave your 401(k) where it is

Your 401(k) can remain with your old employer even if you leave. Though this option is the simplest, it may not be the wisest. If you’re happy with the returns you are getting, there is no problem with leaving the 401(k) account where it is. The problem is that many workers do not know how their 401(k) money is being invested and what kind of fees and other costs they’re being charged.

Also, when you leave the 401(k) as is, you can’t add any more money to it. You will no longer have access to the 401(k) loan option, either. Any outstanding 401(k) loan will have to be paid back at once when you leave the job.

While you’re with an employer, there may be little you can do regarding your 401(k). But once you leave, you have the opportunity to make big changes.

2. Combine it with your new 401(k)

Many workers choose to roll over the balance from their old 401(k) into the new 401(k) or similar plan at their new job. Doing so allows them to manage their assets more easily. But before doing this, you need to know and understand how the new 401(k) is being managed. Some 401(k) plans do not allow you to transfer money out while you are still with the employer — so once your money is moved into the new plan, it may be stuck there. Make sure you are satisfied with the investment options and returns in the new 401(k) before rolling the old one into it.

3. Roll it over into an IRA

For those who are unhappy with how their 401(k) is being managed, a popular option is rolling the old 401(k) account into an IRA. Taking this route gives you the ability to choose the plan provider. You can lower your fees by going with a low-cost plan provider, or switch to one that offers better investment choices.

Many take advantage of this opportunity to switch to a Roth IRA. With a Roth account, you can enjoy tax-free gains and are allowed to withdraw the contributed amounts at any time without penalty. (This may involve paying taxes upfront, however.) Others may opt for a self-directed IRA to take full control of the investment decisions.

4. Roll it over to a Solo 401(k)

If you have an existing side business, or will start a business after leaving your old job, you may qualify to set up a Solo 401(k) account.

As with IRAs, a Solo 401(k) gives you the option to make Roth contributions, as well as to self-direct all investments. It allows investments in real estate, precious metals, private businesses and more — investments not available in a typical 401(k).

One of the biggest benefits of a Solo 401k account is that you can contribute more money to the account than a traditional IRA. As of 2015, a Solo 401(k) plan participant can contribute up to $59,000 annually — more than 10 times as much as the standard IRA annual limit. This limit is calculated based on many factors, including the plan participant’s age, income, and type of business. To calculate the exact contribution allowed, use this Solo 401(k) contribution calculator.

The Christian Science Monitor has assembled a diverse group of the best personal finance bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link in the blog description box above.

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