A new job is one of the happiest financial events there is, and a small pile of money decisions hides behind the offer letter. Here they are in the order they arrive: the old retirement account, the employer match, the insurance gap, the final paycheck, and the paperwork that makes the new pay land correctly.
The 401(k) you're leaving behind
The money in your old 401(k) doesn't disappear when you leave, but it needs a decision. A rollover moves retirement money from one tax-advantaged account to another without it counting as income.
| Option | What happens | The trade-off |
|---|---|---|
| Leave it in the old plan | The money stays invested where it is | Simple, but easy to forget; you're stuck with the old plan's fees and funds |
| Roll into the new employer's 401(k) | Move it into the new job's plan | One account to track; depends on the new plan's options |
| Roll into an IRA | Move it to an account you open yourself | Widest investment choice; you manage it |
| Cash it out | Take the money as a check | Income tax plus a 10% penalty before age 59½ — the costly path |
The first three keep the money growing tax-advantaged. Ask for a direct rollover — the old plan sends the money straight to the new account — because a check made out to you triggers mandatory withholding and a 60-day deadline to redeposit it. IRS Publication 590-A has the rollover rules; what a 401(k) is and Roth vs. traditional cover how the pre-tax or Roth character carries over.
Vesting: how much of the match is yours
Vesting is the schedule that decides when the employer match becomes fully yours. Your own contributions are always 100% yours from day one; the employer's match may vest gradually (say, 20% a year) or all at once on a cliff date a few years in (cliff vesting). Leave before the match fully vests and you forfeit the unvested portion. Your plan's Summary Plan Description states the schedule and your vesting date — if you are a few weeks short, a later start date at the new job can be worth real money. The benefits lesson covers vesting from the new-hire side.
The insurance gap
Employer health insurance usually ends on your last day or the last day of that month, and the new plan may not start immediately. Three ways to bridge the gap:
| Bridge option | How it works | Deadline |
|---|---|---|
| COBRA | Continue the exact old plan temporarily; you pay the full premium your employer used to subsidize | The election deadline is printed on the COBRA notice your employer must send you |
| Marketplace plan | Buy a plan at HealthCare.gov; losing job coverage is a qualifying life event | 60 days from the day your coverage ends |
| New employer's plan | Enroll as a new hire | Usually 30 days from your start date, after any waiting period |
COBRA keeps the identical plan but shifts the whole premium onto you, so the sticker price is a jolt. A Marketplace plan can be cheaper or pricier depending on your income and any premium subsidy. The comparison mechanics are in how health insurance works and choosing a plan.
The paperwork that makes the new pay land
The final paycheck from the old job and the first from the new one arrive on unfamiliar schedules, so a gap of a week or two between them is common — one more reason a cushion helps.
- Direct deposit. Set up direct deposit at the new job, splitting a slice straight to savings if you can.
- A fresh W-4. Every new job means a new W-4, the form that sets your withholding and therefore the gap between gross and net income. Two jobs in one year with mismatched withholding is a classic cause of a surprise April bill; the W-4 lesson walks through the form, and the paycheck calculator previews the new take-home.
- Beneficiaries and the new 401(k). Fill in the beneficiary form on the new plan the week you enroll, and contribute at least enough to get the full match — up to the $23,500 employee limit for 2025.