Congrats on landing that new job! Or maybe you’ve “moved on to other opportunities.” One thing you need to consider: what to do with your old 401(k).

It is estimated there are approximately 15 million “orphan” accounts left behind when employees leave an old job, because of either inertia or plain confusion over strict rules for moving the money. And since the Internal Revenue Service (IRS) doesn’t allow any dawdling over a key decision—you’ve got 60 days to relocate the money into a different account if you withdraw even a dime—here’s a rundown of your options to avoid what could be a costly mistake:

•    Option No. 1: Cash Out.

Unless you absolutely need the money, the general idea is that this is a bad idea. Aside from ceding potential gains in your portfolio, notes Sara Walsh, vice president of retirement solutions at Fidelity Investments, “you will have just given the IRS a huge chunk of the money you’ve been saving for years. That’s money you won’t have for retirement.” How so? Twenty percent is withheld to pay federal income taxes—the state taxman may want a cut, too—with another 10 percent taken out for “early-withdrawal penalty” if you’re under age 59 1/2. Or, to use an example from Fidelity’s website (, say you’re a 36-year-old who raids her $50,000 account. After federal taxes and penalties, you’d be down more than $17,000, for a sum total to you of $32,500.

•    Option No. 2: Roll the Money Over to Your New Employer’s Plan.

Double congrats if your boss is willing or going to match all or part of your new 401(k) contributions. That could be a good sign, but know that not all firms accept rollovers. If yours does, one big question is this: Are the plan’s investment picks to your liking?

•    Option No. 3: Roll the Money Into an IRA.

As with the above option, you can avoid the tax bite of cashing out. The difference, though, is that not only do IRAs offer more investment choices than the typical 401(k), but you’re also able to make penalty-free withdrawals for qualified education expenses or up to $10,000 for a first-time home purchase. “The rollover process is relatively easy,” says Walsh. “And if you already have other accounts elsewhere, it may be simpler and more effective to consolidate under one roof.”

•    Option No. 4: Leave It With Your Ex-Employer.

Penalty-free withdrawals are allowed for those who leave their jobs at age 55 or older (unlike 59 1/2 for IRAs), and unique investment options might warrant just letting things ride. But some people forget the account exists—yes, really—and further contributions are verboten. Whatever you decide, remember the clock is ticking for you to contact your old 401(k) administrator.