If you’re not at your old job, why is your 401(k)?

Your tax-deferred growth will continue, but you’ll no longer be able to make contributions to your account. If your previous employer changes 401(k) providers, it may be more difficult to track down your funds when you retire.

This is not recommended. You’ll pay ordinary income tax on these funds, you’ll be subject to a 10% early withdrawal penalty if you are under the age of 59 ½, and this reduces your retirement nest egg.

If your new employer allows it, you may be able to roll over your previous retirement savings. This will allow your money to continue growing on a tax-deferred basis and keeps your accounts consolidated.

This is the most-used option for several reasons — see our “Why roll your funds from an old 401(k) into an IRA?” feature below.

Your 401(k) was likely limited to a relatively short menu of investments. An IRA allows you to find funds that better fit your goals and timeline.

If you’ve held jobs with several employers, you may have several old 401(k)s out there. Bringing them all together clarifies your financial picture.

Employer plans may have rules restricting changing investments, making withdrawals, etc. An IRA gives you control over these decisions.