What to Do with an Old 401(k) or TSP After Job Loss

Losing a job can feel like the rug’s been pulled out from under you—but your long-term financial security doesn’t have to go with it. If you’ve recently been laid off or left your employer, one of the most important decisions you’ll face is what to do with your old 401(k) or Thrift Savings Plan (TSP).

At Manna Wealth Management, we’ve helped countless individuals navigate this uncertain transition. Here’s a breakdown of your options, the pros and cons of each, and how we can help you make the smartest move for your future.

1. Leave the Account Where It Is

Most plans allow you to keep your money in the former employer’s plan if your balance is over $5,000.

Pros:

• No immediate tax consequences
• Continued tax-deferred growth
• May offer low-cost institutional funds

Cons:

• Limited investment choices
• Harder to manage across multiple accounts
• You can’t contribute anymore

This option is the most passive, but also the most commonly overlooked in terms of growth potential.

2. Roll It Over Into an IRA

Rolling over your old 401(k) or TSP into an Individual Retirement Account (IRA) opens the door to significantly more flexibility.

Pros:

• Broader investment choices (stocks, bonds, ETFs, CDs, etc.)
• Potential for better performance through active management
• Consolidates accounts for easier tracking
• You may convert to a Roth IRA if tax strategy permits

Cons:

• Requires some paperwork (which we handle for you)
• Investment fees vary based on advisor and platform

This is often the best choice for those looking to take control of their financial future and receive personalized guidance.

3. Cash It Out (Not Recommended Unless Absolutely Necessary)

You can withdraw the full amount—but you’ll likely pay a steep price.

Cons:

• Immediate taxes and possibly early withdrawal penalties (if under age 59½)
• Loss of future compounding growth
• Risk of spending what should be long-term savings

Only consider this option if you’re in dire financial straits and have no other access to emergency funds.

4. Roll It Into a New Employer’s Plan (If Applicable)

If you land a new job quickly and the employer offers a retirement plan, you may be able to roll over your funds into the new plan.

Pros:

• Keeps retirement savings consolidated
• Preserves tax-deferred status
• May allow loans (some employer plans do)

Cons:

• Limited investment options
• New plan must accept rollovers

This option can be beneficial if the new plan offers strong investment options and low fees.

Transitions like job loss can be stressful—but they also offer an opportunity to reassess your financial future. At Manna Wealth Management, we’ll help you:

• Evaluate your best rollover or transfer options
• Minimize taxes and avoid penalties
• Align your retirement funds with your long-term goals
• Actively manage your investments to match your risk tolerance and timeline

You don’t need to make these decisions alone. Our fiduciary advisors are here to guide you through every step with empathy, clarity, and proven experience.

Manna Wealth Management – Serving Generations Since 1963.