Your tax-deferred growth will continue, but you'll no longer be able to make contributions to your account. If your previous employer changes 401(k) providers, it may be more difficult to track down your funds when you retire.
Take a cash distribution
This is not recommended. You’ll pay ordinary income tax on these funds, you’ll be subject to a 10% early withdrawal penalty if you are under the age of 59 ½, and this reduces your retirement nest egg.
Roll the old 401(k) to your new 401(k)
If your new employer allows it, you may be able to roll over your previous retirement savings. This will allow your money to continue growing on a tax-deferred basis and keeps your accounts consolidated.
Roll the old 401(k) into an IRA
This is the most-used option for several reasons — see our “Why roll your funds from an old 401(k) into an IRA?” feature below.
Contributions are tax-deductible in the year they are made, but withdrawals in retirement are taxed.