Woman who made the correct choice for her 401k based upon her future goals for retirement.

Making the right choice for your 401(k)

Maybe you’ve switched jobs to take on new challenges. Perhaps you’re thinking about changing career paths for something more rewarding. Or maybe you’re finally getting ready to retire. (Congratulations!)

We understand when your life changes, other things may change too—like your goals for retirement. We’ll help you consider your options for your 401(k) accounts from past jobs, so you can feel confident you’re on track for the future you want.

Roll your money to an IRA

Transfer your money into an Individual Retirement Account (IRA).

  • Your savings stay invested, with similar tax advantages
  • You have access to a wide range of investment options
  • You can roll in retirement savings from other jobs
  • You can keep contributing money to the account
  • Loans aren't allowed, but you may be able to withdraw money before you retire under certain circumstances

Keep your money where it is

Keep your savings invested in your former employer's retirement plan.

  • Your savings stay invested, with the same tax advantages
  • You continue with the plan's investment options
  • You can't make additional contributions
  • Your past employer may decide to make changes to the plan that impact your account
  • Loans aren't allowed, but you may be able to withdraw money before you retire under certain circumstances

Move your money to your new employer's plan

If you have a new employer offering a retirement plan, you may be able to transfer your savings into it.

  • Your savings stay invested with the same tax advantages
  • You might be able to roll in savings from other retirement plans
  • You can make ongoing contributions.
  • The investment options depend on what the plan offers.
  • You may be able to take out a plan loan, or withdraw money before retirement under certain circumstances

Cash out your account balance

You can take your savings as a lump-sum cash distribution.

  • You get immediate access to your money, but you may lose up to 30% of it to taxes and penalties
  • You’ll miss out on any future growth or earnings
  • May move you to a higher tax bracket, which means you might have to pay more in taxes

So, what’s right for you?

Use this chart to help see which options match your wants and needs.


Keep your money where it is

Roll your money into a new IRA

Move your money to a new employer plan

I want to keep my savings invested.


I want to add more money to the account.


I like the investments I have today.

Varies by accountVaries by plan

I’d like to choose from a wider range of investment options.

Varies by plan1Varies by plan1

I want help picking investments and managing my account.

Varies by planVaries by plan

I want to combine multiple accounts into a single account.

 Varies by plan

I want to be able to borrow money from my account.

  Varies by plan

I want to retire and withdraw money as early as age 55.


I’d rather my retirement savings account not be tied to my employer.


Explore other retirement savings account options (PDF).

You’re ready to take the next step.

Now that you’ve got the knowledge you need to make the right decision for you, you’re ready to take the next step.

  • Staying in your old plan? You’re already done. Keep watching your account statements to make sure your savings are on track with your goals. And remember, you can roll your savings to an IRA at any time in the future, if you want to.
  • Moving your savings to a new 401(k) plan? Contact HR at your new employer and they’ll help you get started.
  • Rolling over to an IRA? Get the scoop on how to start an IRA, or see if a Principal IRA is right for you.

This document is intended to be educational in nature and is not intended to be taken as a recommendation. 

Investing involves risk, including possible loss of principal. 

The subject matter in this communication is provided with the understanding that Principal® is not rendering legal, accounting, or tax advice. You should consult with appropriate counsel or other advisors on all matter pertaining to legal, tax or accounting obligations and requirements.