If you have a dusty, half-forgotten 401(k) from a previous job, there’s new pressure to get around to doing something with it — before your old company does something to it that you don’t like.
- Since 2001, 401(k) sponsors have been allowed to automatically boot you out of their plan and into an IRA account if your balance was between $1,001 and $5,000.
- In 2024, that upper limit is moving to $7,000, exposing an estimated 800,000 more people to involuntary rollovers.
- If your old 401(k) balance is under $1,000, the treatment could be even uglier. Employers can just cash you out, exposing you to ordinary income tax on the account balance, plus a 10% penalty if you’re under age 59 1/2.