Should I roll over my old 401(k) when changing jobs?

You have four options: leave the money in your old employer's plan, roll it into your new employer's plan, roll it into an individual retirement account (IRA), or cash it out. Cashing out triggers income taxes plus a 10% early withdrawal penalty if you're under 59½, so it's almost always the worst choice. Rolling into an IRA often gives you the widest range of low-cost investment options. Rolling into a new employer plan keeps everything in one place. Leaving it behind is fine short-term but can lead to forgotten accounts. Use a rollover calculator to compare the long-term impact of each option.

How do I compare two job offers beyond salary?

Base salary is just one piece. Add up the full package: employer retirement match, health insurance premiums and deductibles, bonus and equity compensation (like restricted stock units), paid time off, and any other perks like tuition reimbursement or commuter benefits. A job paying $80,000 with a 6% 401(k) match and low-cost health insurance may be worth more than a $90,000 offer with no match and expensive premiums. A total compensation calculator helps you see the complete picture side by side.

What happens to my health insurance when I change jobs?

When you leave a job, your employer-sponsored health insurance typically ends on the last day of the month you leave (though some employers end it on your last day). You can continue coverage through COBRA (Consolidated Omnibus Budget Reconciliation Act) for up to 18 months, but you pay the full premium — both your share and what your employer was paying — plus a 2% administrative fee. Alternatively, losing job-based coverage qualifies you for a special enrollment period on the health insurance marketplace. If your spouse has employer coverage, joining their plan during their next open enrollment or your qualifying life event is often the cheapest option.

Changing Jobs — Financial Checklist

Changing jobs affects your retirement accounts, health insurance, tax withholding, and take-home pay. Whether you're leaving voluntarily or were laid off, there are financial decisions that need attention before and after the switch. Work through this checklist to avoid leaving money behind or creating gaps in your coverage.

Compare Total Compensation

Don't compare job offers on salary alone. The full package includes bonuses, equity grants like restricted stock units (RSUs), employer retirement match, health insurance premiums and deductibles, paid time off (PTO), and benefits like tuition reimbursement or commuter subsidies. A lower-salary offer with a generous 401(k) match and cheap health insurance can be worth more than a higher salary with weak benefits.

Total compensation = salary + bonus + equity + benefits

Add up every component with a dollar value. Employer-paid health insurance premiums, retirement contributions, and equity grants are real money — they just don't show up on your paycheck.

Taylor's two offers

Taylor has two offers: Company A pays $90,000 with no retirement match and $400/month employee health premiums. Company B pays $82,000 with a 5% match on a 5% contribution and $100/month premiums. The match alone adds $4,100/year. The insurance savings add $3,600/year. Company B's total compensation is actually $7,700 higher — despite the lower salary.

Try it

Enter both offers in the Total Compensation Calculator for a side-by-side comparison. Then use the Salary Projection Calculator to model how each salary trajectory looks over 5–10 years.

For a deeper look at how salary growth compounds over a career, read Salary and Career Growth.

Handle Your Old 401(k)

When you leave an employer, you have four options for the money in your 401(k) (or 403(b), if you're in education or nonprofit):

Your four 401(k) options

Leave it — Keep the money in your old employer's plan. Fine short-term, but you can't contribute more and may forget about it.
Roll it to your new employer's plan — Keeps everything in one place. Check the new plan's fund options and fees first.
Roll it to an individual retirement account (IRA) — Usually gives you the widest range of low-cost index funds. Most common choice.
Cash it out — You'll owe income taxes on the full amount plus a 10% early withdrawal penalty if you're under 59½. Almost always the worst option.

Before you decide, check your vesting schedule. Some employers require you to work a certain number of years before their matching contributions are fully yours. If you leave before you're fully vested, you may forfeit part of the employer match.

Vesting

Vesting is the process by which employer contributions to your retirement account become permanently yours. A common structure is a "cliff vest" — 0% until year 3, then 100%. Graded vesting increases your ownership percentage each year (e.g., 20% per year over 5 years). Your own contributions are always 100% vested immediately.

Try it

Use the 401(k) Rollover Calculator to compare the long-term impact of rolling over versus leaving the money behind. Then plug your new plan's details into the 401(k) Calculator to project your growth in the new account.

For more on how 401(k) plans work and why employer match matters, read Employer Benefits & 401(k).

Maximize the New Employer Match

Enroll in your new employer's retirement plan as soon as you're eligible. At minimum, contribute enough to capture the full employer match — it's an immediate 50–100% return on your money, depending on the match formula.

Jordan starts a new job

Jordan's new employer matches 50% of contributions up to 6% of salary. Jordan earns $70,000. Contributing 6% ($4,200/year) earns $2,100 in free match money. Contributing less than 6% means leaving part of that $2,100 on the table.

A job change is also a good time to reassess whether Roth or traditional (pre-tax) contributions make more sense at your new income level.

Try it

Use the Employer Match Optimizer to find the right contribution rate for your new plan. Then run the Roth vs. Traditional Calculator to see which account type saves you the most in taxes over time.

Bridge the Health Insurance Gap

When your employer-sponsored health insurance ends, you typically have three options to avoid a gap in coverage:

COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) lets you continue your old employer's health plan for up to 18 months. The catch: you pay the full premium (your share plus what your employer was paying) plus a 2% administrative fee. COBRA is often expensive, but it keeps your same doctors and network.

Marketplace coverage: Losing job-based insurance qualifies you for a special enrollment period on the health insurance marketplace (healthcare.gov). Depending on your income during the gap, you may qualify for premium tax credits that make marketplace plans cheaper than COBRA.

Spouse's plan: If your spouse has employer coverage, your job loss is a qualifying life event that lets you join their plan outside of normal open enrollment. This is often the cheapest option.

Don't go uninsured during the transition. A single emergency room visit without insurance can cost tens of thousands of dollars.

If your new employer offers a high-deductible health plan (HDHP) with a health savings account (HSA), that's worth evaluating — HSAs offer a triple tax advantage that no other account type matches.

Try it

Use the HSA Calculator to see how much a health savings account could save you in taxes and grow over time.

Read Insurance 101 for the fundamentals, and HSA: The Triple Tax Advantage for a deeper look at why HSAs are one of the best tax-advantaged accounts available.

Update Your Tax Withholding

Your new employer will ask you to fill out a W-4 (the federal tax withholding form). With a different salary — and potentially a different state — getting the withholding right matters. Too little withheld means a surprise tax bill in April. Too much means you gave the government an interest-free loan.

If you changed jobs mid-year, the situation is trickier. Your old employer withheld taxes based on one salary, and your new employer will withhold based on a different one. Neither employer knows about the other, so neither can calculate your full-year tax perfectly.

Sam's mid-year job switch

Sam earned $45,000 at their old job through June, then started a new job paying $75,000 in July. The new employer's payroll system withholds as if Sam will earn $75,000 all year — but Sam's actual annual income is about $82,500. Sam adjusts the W-4 to withhold extra per paycheck and avoids a $1,200 tax surprise in April.

Try it

Run the W-4 Withholding Estimator to calibrate your new W-4. Use the Take-Home Pay Calculator to see what your new paycheck will actually look like, and the Tax Bracket Visualizer to understand how your new income fits into the federal brackets.

For a full walkthrough of how paychecks and withholding work, read Understanding Your Paycheck.

Check Your Budget

A new job often means changes beyond salary: different commute costs, new parking or transit expenses, different lunch habits, and sometimes a move to a new city. Update your budget to reflect the actual cost of the new job, not just the income change.

If you're relocating, compare the cost of living between your current and new city before assuming a higher salary means more spending power. A 20% raise doesn't help if housing costs 40% more.

Try it

Update your numbers in the Budget Calculator. If you're moving, run the Cost of Living Comparison to see how far your new salary goes in the new location.

For budgeting basics and frameworks, read Spending and Budgeting.

Review Equity and RSU Vesting

If your current employer grants restricted stock units (RSUs) or stock options, check your vesting schedule before giving notice. Unvested equity is money you leave behind when you walk out the door.

Common vesting schedules for RSUs are four years with a one-year cliff — meaning you get nothing if you leave before the first anniversary, then shares vest quarterly or annually after that. If you're close to a vesting date, it may be worth negotiating your start date with the new employer to capture those shares.

Negotiating around equity

When you can quantify the unvested equity you're giving up, you have leverage to negotiate a signing bonus or accelerated equity grant at the new company. Calculate the dollar value of what you're forfeiting and present it during negotiations.

For more on equity compensation and career strategy, read Salary and Career Growth.

Job change checklist

Compare total compensation, not just salary — include match, equity, insurance, and PTO.
Roll over your old 401(k) — don't cash out and don't forget about it.
Enroll in the new retirement plan immediately and contribute enough for the full match.
Bridge the health insurance gap — COBRA, marketplace, or spouse's plan.
Recalibrate your W-4 withholding for the new salary and mid-year income.
Update your budget for new commute, location, and expense changes.
Check RSU and equity vesting dates before setting your last day.