Basic Question about a 401k (really basic)

[El_Mero_Mero]

If I work at a company offering me a 401k and I choose to enroll in it, but then I quit after a year at the company. And then, 5 years later I get rehired by the company, will the money I earned in my 401k previously still be there?

You can tell that I have no experience with 401ks, and will probably only have a Roth IRA, but just in case, I would like to know the answer to this seemingly common sense question.

 

[The ADD]

Depends on if you leave it in the plan there or transfer the $ out

 

[PoorAndDangerous]

Depends on if you leave it in the plan there or transfer the $ out

This. Normally you would roll it over into your new employers 401k plan. If your employer matches your 401k contributions you’ll also want to look at how many years you need to stay with them to be 100% vested otherwise you could lose a decent chunk of change from your 401k for leaving. Also you should probably have a 401k (most 401k plans allow you to choose a Roth 401 fyi) and a Roth IRA since there is a contribution limit on the Roth IRA. While you’re at it I would look at how your 401k is setup. Some of those managed funds have super high fees and you can select an option with less.

 

[Hahahaha]

This. Normally you would roll it over into your new employers 401k plan. If your employer matches your 401k contributions you’ll also want to look at how many years you need to stay with them to be 100% vested otherwise you could lose a decent chunk of change from your 401k for leaving. Also you should probably have a 401k (most 401k plans allow you to choose a Roth 401 fyi) and a Roth IRA since there is a contribution limit on the Roth IRA. While you’re at it I would look at how your 401k is setup. Some of those managed funds have super high fees and you can select an option with less.

Should likely choose the 401K over the IRA (unless you can afford both) as I'm assuming his company offers some type of match.

 

[dora_da_destroyer]

Should likely choose the 401K over the IRA (unless you can afford both) as I'm assuming his company offers some type of match.

Choose the 401k first only up to the maximum match. Then fund the IRA - more flexible and cheaper investing options. Then if you still have money to invest, go back and fund your 401k to the maximum of your ability or up to the limit.

and OP, you can leave your 401k in the original plan (this ends up costing more as they charge former employees more to manage the account), transfer it to your next employer’s 401k plan, or open a rollover IRA where you can roll your old 401k to (def has advantages, only causes problems for high earners trying to do a backdoor Roth - whole other conversation that doesn’t apply to many people).

 

[El_Mero_Mero]

Thanks for the information everyone. This is more of a hypothetical since I am not working at any company that is offering a 401k, but I know that within the near future I might be, as I look for more serious/secure employment.

My thing was, hypothetically speaking, if I were working at Hilton Hotels, and then took 2 years off to travel, and then came back to work at Hilton in the same city at the same position, I was wondering if the money would still be there as long as I never took out. I think @PoorAndDangerous basically give me some good info. to start off with.

 

[dora_da_destroyer]

Thanks for the information everyone. This is more of a hypothetical since I am not working at any company that is offering a 401k, but I know that within the near future I might be, as I look for more serious/secure employment.

My thing was, hypothetically speaking, if I were working at Hilton Hotels, and then took 2 years off to travel, and then came back to work at Hilton in the same city at the same position, I was wondering if the money would still be there as long as I never took out. I think @PoorAndDangerous basically give me some good info. to start off with.

It still might be better to roll it into a rollover IRA where you can invest in lower fee higher growth securities - basically make more money - and there won’t be any account management fees. Then when you go back to Hilton, you can roll it into their 401k again or just leave it in the IRA