Leaving your job? Roll 401(k) into an IRA

0 Comments | USA TODAY, June, 2009 | by Sandra Block

Most employees leave their jobs with a box full of keepsakes: company awards, coffee mugs, maybe a photo of the boss wearing a lampshade on his head. But here's something many departing employees leave behind: their 401(k) plans.

More than 40% of assets in 401(k) plans owned by workers who left their jobs in the first quarter of 2008 were still with their former employers a year later, according to a recent analysis by Charles Schwab. The remaining assets were invested in an individual retirement account, rolled into a new employer's plan, or cashed out.

Leaving your 401(k) with your former employer is vastly better than cashing it out, which will trigger taxes, and if you're under 591/2, early-withdrawal penalties. But IRAs offer numerous advantages not typically...