What to do with your 401(k) when you change jobs

Changing  jobs? Welcome to the party. The Bureau of Labor Statistics found baby boomers changed jobs an average of 11 times between ages 18 and 50. And it's not just boomers. A recent LinkedIn member survey showed people who graduated college between 2006 and 2010 changed jobs about three times on average by 2016.

Changing jobs can be good because it can mean a raise, a better title or a better company. But because many people have retirement plans affiliated with their employer, changing companies means making some decisions about what to do with those savings.

Fully vested

You should know whether you're vested in the money in your plan.

Contributions to 401(k) plans can vest in two ways -- "cliff" or "graduated." In the first case, you may work at a company for a set period of time before you become fully vested. Or your vesting may be graduated, so that, for instance, every year another 20 percent of the employer contributions vest before you're fully vested.

"When you get a new job, some employers may want you to work there for a year before you are eligible for a 401(k) plan. And you often have to work there for three years to get that 6 percent or 4 percent employer match. They try to restrict some of the company plan benefits [to create an incentive for loyalty]," wealth adviser Ben Barzideh told CBS MoneyWatch.

What to do with the money

Leave it as is for now. But know that you may not not be able to do this indefinitely. If you have under $5,000 in the account, your employer can either send you the funds or roll it into an IRA, depending on the amount. You'll no longer be able to make contributions to the account, and your company may have rules regarding whether you can keep it open. 

Transfer the money directly into a 401(k) account at your new company. If the account is run by the same firm, you may be able to move the money over with a bit of paperwork. If not, you may have to pay an account closeout fee to the first account manager to transfer it over.  

Do a "rollover" and move the money into a Traditional IRA. IRAs tend to have more investment options than 401(k)s because you aren't limited by the options offered in your employer's plan. You want the "rollover" or transfer of funds to be direct, meaning that the check should be made out directly to the institution that will be holding your IRA -- the money should not be sent to you, or you'll have to pay a 20 percent withholding tax.  

Depending on your level of comfort with investing, you should shop around and compare different types of IRAs, or consult a financial adviser before selecting a plan.

"There are plenty of nonintimidating options. A simple robo adviser can be set up in a matter of minutes online. If you want a little more hand-holding, many advisers are out there," Nick Holeman, certified financial planner at Betterment told CBS MoneyWatch.

But, he added, it can take some time -- so planning ahead helps. "Rollovers can take a couple of weeks, so it's important to set expectations and make sure you understand what the process will entail," Holeman said. 

Stash the cash. If you can hold off on dipping into the money, most financial experts say it's best to continue saving and investing it to meet your retirement goals. That's because you could end up losing a third of it to taxes and penalties if you take a distribution before age 59 1/2. 

Enroll in a new plan?

Most companies automatically enroll you in a 401(k) plan if they sponsor one -- you would have to opt out manually. Even if you roll over the money from your previous 401(k) into an IRA, you should enroll in your new company's 401(k) plan if it offers a match -- otherwise, you're leaving money on the table. A single individual within the income limits can contribute only $5,000 a year into an IRA, but you can contribute up to $18,000 (for 2017) into a 401(k) plan. Most financial advisers recommend a diversity of retirement vehicles to help you save.

"I would still advise someone to use their company's plan," said financial adviser Ryan McPherson. "If you can easily contribute to it, that makes it so easy to do the right thing. If you have a 401(k) at work, it's many times more seamless to contribute every paycheck."