You have several options when deciding what to do with your 401k account balance:
- Rollover to a self-directed IRA. This option also avoids the taxes and penalties on your money. It allows you to choose your investments and be properly diversified for your risk tolerances.
- Take a lump sum distribution. You are liable for income taxes on the entire amount and possible early withdraw penalties. (Don't spend it- save it!)
- Rollover to your new employers' plan. This will allow you to transfer the money with no taxes or penalties.
- Leave it where it is. Some plans permit this. This give you the ability to keep your money invested and watch it grow, however, you are no longer able to contribute to this plan. Also, there is no matching company contribution.