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January and February are when companies tend to hire the most, according to Indeed, so now’s a great time to put your application out there if you’re looking to make a change in 2025. Obviously, finding a job that aligns with your skillset and your priorities will be top of mind. Then, once you get hired for a new position, you’ll need to spend some time learning the ropes.
But don’t forget to make some time to review your retirement savings strategy, too. Here are three key moves to make as you settle into your new job.
Image source: Getty Images.
1. Figure out what to do with your old 401(k)
If you had a 401(k) through your previous employer, you have to decide what to do with that money. If your balance is less than $1,000, your employer can close your account and cut you a check. You must deposit this money into a new retirement account within 60 days, or the government will tax it as a distribution. If your balance is between $1,000 and $5,000, your employer can roll your funds into an IRA of its own choosing.
Your employer has to leave your money alone if you have more than $5,000 in your account, but that doesn’t mean that’s the best move for you. You may prefer to roll that money over into an IRA where you have greater control over your investment options. Or, if your new plan permits it, you can roll your old 401(k) funds into your new plan.
If you decide to move your money, opt for a direct transfer instead of an indirect transfer. This is where you tell your old plan administrator where you’d like the funds sent, and it moves the money for you without it ever passing through your hands. If you opt for an indirect rollover where you receive a check, your employer must legally withhold 20% for taxes. You need to deposit the full amount, including the withheld 20%, in a new account within 60 days to avoid taxes, and possibly a 10% early withdrawal penalty if you’re under 59 1/2.
2. Figure out if you’re eligible to contribute to your new 401(k)
You may not be able to contribute to your new employer’s 401(k) right away. Employers may require you to complete one year of employment and be at least 21 years of age to participate in the plan. Part-time employees may need to have at least two years of employment with at least 500 hours of service in each year to participate in the 401(k).
If you can’t contribute to your new 401(k) right away, you’ll need a backup plan. An IRA is a good choice for most people because you can open one on your own. You can choose how you invest your money and when you want to pay taxes on your savings. However, if you choose a Roth IRA, you have to watch out for income limits.
You may be able to make things easier on yourself by setting up an automatic transfer from a linked bank account, so you don’t have to manually transfer your funds. Check with your IRA provider if you’re not sure how to set this up.
3. Reevaluate your investment strategy
New jobs often bring new salaries, so you may need to reevaluate how much you save per month or per pay period. Ideally, you want to aim for 10% to 15% of your annual income. But you also have to watch out for your plan’s contribution limits.
This isn’t as much of an issue with 401(k)s, which allow adults under 50 to contribute up to $23,000 per year, while those 50 and older can contribute even more. But if you’re just saving in an IRA, you have to be mindful not to exceed the $7,000 annual contribution limit ($8,000 for adults 50+).
It’s also a good idea to review the investment options available to you to make sure you’re maximizing your gains while minimizing your risk. Index funds are a great option for most people, because they help you diversify your portfolio and they have low fees. Target-date funds are also an option if you want hands-off investments that adjust to match your changing risk tolerance over time.
It’s good to revisit this question at least annually, as your investment options and your savings strategy might change over time. Put a note on your calendar so you remember to look over your investments again in 2026.
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