It can be perplexing when you leave one job for another: What do you do with the old job's 401(k) -- cash it out or roll it over into an IRA or another financial instrument?
"Always roll it over."
That's the advice of Michael Masor, financial fiduciary and CEO of Clearwater Financial Group, who says too many people are confused by the procedures required for rollovers into accounts at the new job they've taken.
You can get help in transferring the money from your old 401(k) by asking the HR people at your new company for assistance with the rollover.
A smart move, he says, because cashing out the retirement account may be a source of regret later when you need the money more than you might need it now.
"It seems small now, especially in your 20s or 30s or even 40s but you need to keep adding to that and keep just looking ahead," Masor advises.
And it's too easy, he says, to believe that retirement accounts are much the same as savings accounts.
But they're far from it.
"Don't think of it as a savings account, this is not a savings account, this is your retirement, and in retirement these days people are living longer and you're going to need that 401(k) money then.
Perhaps worst of all, though, are the tax penalties on cashing out your 401(k).
"You're going to pay a ten-percent penalty if you're younger than 59-and-a-half."
But get this: "If you're in a 22-percent tax bracket, you can add another 10-percent, now you're at a total of 32. That's 32-percent.
"So now you're giving away [to taxes] a-third" of the money you cashed out.