Planning for retirement is a project that you do for virtually your entire adult life. The earlier you start putting money back for retirement, the better your golden years will be. And if you have been faithful in participating in your employers’ 401K plan, you can start to some serious money begin to build up as you realize the vesting of the employer matching funds and you continue to make your contributions month after month. It can get pretty exciting when you get those statements and you see your retirement fund really start to take shape.

But your career in business can take a lot of twists and turns along the way. And sometimes you change jobs for a lot of reasons. But the question comes up then, “What happens to my 401K money if I leave before retirement?” The good news is that you don’t lose it. The 401K program is federally monitored and once those funds go in there, they are yours if you are vested in them.

But if you move jobs several times during your career which is very common in the modern business marketplace, if you don’t take some action, you can end up with retirement money scattered over all of your last jobs which is messy and makes for a nightmare to keep track of. It would be better if you can make your retirement money walk with you so you know where it is and you can keep all of your retirement planning funds in one place so you can take advantage of them all at once when you are ready to retire.

When you first leave your employer to go to another company you are given a couple of choices of what to do with your retirement funds. One option is to leave them behind to catch up with them decades later when you are ready to retire. In addition to wanting to keep this important asset with you as you travel from job to job, you have no idea if that employer will even be in business when you are ready to retire. You don’t need that kind of uncertainty when it comes to your retirement money.

Another option that is offered to you is to cash out your 401k and withdraw the results. While this may be attractive if you are between jobs, it’s really a bad idea. For one thing, the laws governing the 401k call for you to pay a large penalty if you withdraw them before retirement age. Not only that, once you take that money out of your retirement funds, it’s gone and your retirement planning will suffer a serious setback.

A very good option that is available to you is to roll your current 401K over to your new employer. Now if you left the last job without a new employer either through termination or leaving to start your own business, that may not be an option. If you are looking for a new job and think you will have one in the next year or so, you can leave your 401k money where it is and transfer it later though. In that way, your 401k continues to accumulate as one fund, not many.

But a third option is to roll the 401k money into a tax-sheltered privately owned retirement fund. You own this account and you usually have an investment management company helping you with the investment and protection of that money until it is time for you to retire. This is an outstanding option because that investment company works for you so you call the shots about your retirement money. And if you use this option, you can still start with a new 401k fund at your next employer knowing you have a place to put the funds in the event of another change of jobs. And that puts you in the driver’s seat which is a very good feeling when it comes to retirement planning.