How to Dissolve an Old 401(k)

by Cindy Quarters

When you leave a company, you can choose to go without taking your 401k with you. It typically can remain with the employer and continue to grow through good investments and interest earnings. At some point you will want to access this money and close your old account. Several factors can affect your tax liability when you close your old 401k. It is important to be aware of these so that you can make the best possible use of your money.

1. Locate your old account and determine the balance. The best way to do this is by contacting the employer where you have the 401k. The personnel department should have all the records relating to your account.

2. Search for company information if you find that the company no longer exists. Use online tools such as the free Employee Retirement Income Security Act (ERISA) search tool, which locates the 401k records for investors nationwide. If you still can’t find information for your old account, check the National Registry to see if you might be listed as a missing plan participant.

3. Call the company and request contact information for the plan administrator. If you have old account statements, you may already have this information. It will help you if you can also get your account number. This is often linked to your social security number, so if you can’t find the account number you should still be able to locate the account.

4. Request withdrawal forms from the plan administrator. You will need to fill out these forms completely in order to get your money out of the plan. Consider carefully what you are going to do with the money, since you will have 30 percent of your balance withheld for taxes and penalties if you are not yet retirement age or otherwise qualified to use the funds. Once you receive the funds, your old 401k account will be closed.


  • Dissolving a 401k usually refers to the process an employer follows when terminating the entire program. An individual with an old account simply closes it.


  • If you receive the money from your old 401k, 20 percent will be withheld for taxes. If you are not yet 59 1/2 and do not have another qualifying conditions, such as a disability, you will also be penalized an additional 10 percent. These are the amounts automatically withheld from your 401k distribution, however, depending on your income you may end up owing even more.

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