“What do I do with my retirement account if I move on to freelance or a new job? I won’t lose my savings, right?”

— Jennifer, Brooklyn, New York

Before making a move, grasp the potential impacts on your retirement funds. Ignoring this may lead to losing valuable money. Here are some vital factors to consider:

Are you fully vested?

Your contributions are always 100 percent vested, but your employer's match typically vests over a span of three to five years. Leaving could mean losing some or all of that match, plus any earnings from it.

Do you have an outstanding loan against your 401(k)?

If you do and decide to leave, the loan balance needs to be repaid quickly—usually within 60 days. Failing to do so turns it into a taxable distribution, along with a 10 percent penalty for that year.

Is your account balance under $5,000?

If it is, act fast to roll over the funds, or your former employer might send it to you directly while withholding the mandatory 20 percent for taxes. If you miss the 60-day rollover window and are under age 59 ½, expect a 10 percent tax penalty alongside any taxes owed.

Does your new employer provide a retirement plan?

If yes, consider transferring the funds from your old plan to the new one. Check your eligibility timeline and think carefully about your new investment choices. If there’s a waiting time, you can keep your funds in the old plan temporarily. Just ensure rollover checks are made out directly to the new plan administrator, not to you.

Will you need the money after leaving?

Think twice about this, as it can hurt you financially both now and later. Cashing out incurs taxes and penalties (as mentioned earlier), impacting your long-term savings. So, it’s best to avoid this option.

Generally, transferring your 401(k) to an IRA or Roth IRA is the smartest move when changing jobs or freelancing. This gives you more investment choices and potentially lower fees. Plus, you can keep contributing to your account, which isn’t possible if you leave it with your former employer.

If you have an IRA ready for the rollover, that’s excellent. If not, setting one up is straightforward at nearly any financial institution. Ensure your administrator sends a check directly to the new administrator to sidestep tax issues. Remember, rolling into a Roth means you’ll owe taxes on that amount for the year. Best of luck!