Whether you're switching jobs or facing an unexpected layoff this spring, you’re not alone. With workforce shifts continuing across both the private and public sectors, many professionals—especially in education, public service, and federal roles—are left wondering: What should I do with my retirement savings now?

How you handle your 401(k), 403(b), 457(b), or TSP account after a job change can significantly impact your financial future. Here’s what you need to know in 2025.

First Things First: What Are You Entitled To?

When you leave a job, you’re entitled to your vested retirement balance. This always includes what you contributed, whether it was pre-tax, Roth, or after-tax. It also includes investment earnings and any vested employer contributions.

In most 401(k) plans, vesting follows either:

• Cliff Vesting – 100% after three years, or
• Graded Vesting – 20% per year, fully vested after six years

If you’re close to vesting more of your employer’s contributions, it may be worth delaying your exit if possible. Your Summary Plan Description (SPD) outlines the specifics. If you don’t have it, ask your HR department or plan administrator.

What If You’re a Government Employee?

If you work in the public sector—such as federal, state, or local government—you may be contributing to a 403(b), 457(b), or Thrift Savings Plan (TSP) instead of a 401(k). The good news? You still have solid options.

403(b) and TSP accounts function similarly to 401(k)s in terms of rollovers and withdrawals, but 457(b) plans, especially those for government employees, come with a special advantage:

You can withdraw funds without the 10% early withdrawal penalty at any age, as long as you've separated from service.

If you’re leaving government work, you can:

• Leave the funds in the plan
• Roll the balance into an IRA
• Transfer the balance to another eligible employer plan (if allowed)

The Thrift Savings Plan (TSP) also allows for rollovers to traditional or Roth IRAs, and recent rule changes have made partial withdrawals and Roth TSP options more flexible. However, investment choices are limited compared to IRAs, so it’s worth reviewing your long-term strategy with a financial advisor who understands the unique rules of public-sector plans.

Don’t Be Tempted to Cash Out

Even if your account balance feels like a much-needed lifeline during a transition, withdrawing those funds early may cost you. Unless you meet certain exceptions, early distributions are taxed at ordinary income rates and may incur a 10% early withdrawal penalty (except for 457(b) plans or if you’re age 55+ and retired).

Whenever possible, consider a rollover to avoid unnecessary taxes and penalties.

Where Should You Roll Your Funds?

If you’re not leaving your money in your current plan, you typically have two main options:

Option 1: Rollover to an IRA

Pros:

• Access to thousands of investment options
• Greater control over account providers and fees
• Flexible withdrawal schedules
• Option to convert to a Roth IRA (taxable now, tax-free later)

Cons:

• No borrowing allowed
• Less creditor protection (depending on state law unless in bankruptcy)

Option 2: Rollover to a New Employer’s Plan

Pros:

• May allow you to borrow from your balance (if permitted by the new plan)
• Strong federal protection from creditors
• Delay required minimum distributions (RMDs) if still working past age 73
• Preserve Roth 401(k) clock (rolling into a Roth IRA restarts the five-year clock)

Cons:

• Typically fewer investment choices
• Plan fees and rules may be less flexible

Special Considerations for Government Employees Rolling Over

If you’re coming from a 457(b) plan, know that rolling into an IRA or 401(k) means you lose the penalty-free early access unique to 457(b) plans. For some, that’s a good reason to leave funds where they are or transfer to another 457(b) if available. TSP participants should also compare the low fees of the TSP against IRA options, especially when approaching retirement.

Ask the Right Questions Before You Rollover

Before you make any moves, ask:

• Are there surrender or early withdrawal fees?
• How do fees compare between my old plan and the new one?
• Am I giving up any unique guarantees or insurance protections?

It’s a great idea to speak with a fiduciary financial advisor who can walk you through the implications for your specific situation—especially if you have a government retirement plan with specialized features.

What If You Have a 401(k) Loan?

If you borrowed from your 401(k), you’ll likely have to pay it back in full when you leave—or it’s considered a distribution, triggering taxes and possibly penalties. However, you now have 60 days to roll over that deemed distribution amount into an IRA, provided you have the cash available.

Note: Government plans like the TSP do not permit loans after you leave service.

Need Help with Your Retirement Plan Rollover? Let’s Talk.

Whether you’re a private-sector professional or a public employee navigating a career change, Mirus Financial Partners can help you review your retirement account, weigh your options, and create a plan that protects your future.

Investment Advisor Representative offering securities and advisory services through Cetera Advisor Networks LLC, a Broker/Dealer and Registered Investment Advisor, member FINRA/SIPC. Cetera is under separate ownership from any other named entity.