When you change jobs, you need to decide what to do with the money in your 401(k) plan. You have several options and the best option is unique to each individual based on age and needs.

Option #1: You can withdraw the funds from your 401(k) when you leave your job. You will have to pay federal (and possibly state) income tax on the money you withdraw. If you’re under age 59½, you’ll generally have to pay a 10 percent premature distribution penalty tax in addition to regular income tax, unless you qualify for an exception.

Option #2: You can always roll over your 401(k) funds to your new employer’s retirement plan if the new plan allows it.

Option #3: You can also roll over your funds to a traditional IRA.

Option #4: You can also roll over (“convert”) your 401(k) money to a Roth IRA. The taxable portion of your distribution from the 401(k) plan will be included in your income at the time of the rollover.