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Your 401(k): Four things to consider when you change jobs

When you terminate employment, you need to make important decisions regarding your retirement plan.

Generally, you have three choices that allow you to continue to defer income taxation: leave the investments with your current employer, move them to your new employer or transfer them to an Individual Retirement Account (IRA).

Of course if you are permanently retiring, the new employer plan is not an option.

Another choice is to cash out your account and pay income taxes on the withdrawal. This is usually not a good alternative since taxes will reduce the amount available for retirement and withdrawals prior to age 59 ½ will generally incur an additional 10% penalty.

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