Staying at one job your entire career is mostly a thing of the past these days, so when you make your next career move its helpful to know some 401(k) mistakes to avoid.

If you’ve been saving for years and your 401(k) account is looking healthy (which may not be the case right now amid the coronavirus crash), you may be tempted to make a quick decision regarding where your funds will go next.

It’s important to know that you don’t usually have to rush to any kind of decision regarding your 401(k) account after you leave a company. A Financial Engines study from 2019 found that 42% of people didn’t realize you could leave your money in an account after leaving a company.

“A very large portion of workers are unaware of all their options, and often make choices that expose them to risks, fees and taxes that are otherwise avoidable,” Financial Engines founder Ric Edelman told Barron’s.

Let’s take a look at some 401(k) mistakes to avoid when leaving a job.

401(k) Mistakes to Avoid

Taking the Money and Not Reinvesting

Withdrawing all of your funds without reinvesting them into some other qualified retirement account can crush your retirement savings due to the taxes you’ll have to pay.

“People don’t realize the incredible cost to their financial security,” Edelman said.

Withdrawing without reinvesting is a big 401(k) mistake on two different counts: You’ll get hit with massive tax penalties (income tax and another 10% early withdrawal penalty if you aren’t older than 59 1/2), but then you also lose out on the benefits of tax-deferred compounding.

An account balance of only $20,000 with 6% annual returns could hit $120,000 over 30 years — and that’s if you don’t touch it at all. Withdrawing before that cutoff age means you are already paying a $2,000 penalty before other taxes even kick in. This has got to be the biggest 401(k) mistake to avoid.

Always Going With an IRA

retirement-Roth 401(k) mistakesHaving one place to put all of your retirement funds like an IRA is a nice, convenient option, but it shouldn’t be your go-to decision every time without some careful analysis.

This is a fairly subtle 401(k) mistake to make, but sometimes withdrawing your funds and placing them in an IRA isn’t the best option. Your 401(k) account may have more investment options, institutional pricing or other benefits that aren’t offered in an IRA.

Financial Engines ran the numbers on in-plan fees, and the firm found that employees who left their balance in a 401(k) instead of placing them into a newly created IRA could save around $4,600 over 10 years on a balance of $100,000. This isn’t the case for all accounts, of course, but it shows that doing a little bit of research can mean avoiding a simple 401(k) mistake like this.

Rolling Over Every Time

This 401(k) mistake should be easy to avoid in most cases. When moving funds from a 401(k) to another plan or similar retirement account you can either “rollover” funds or do a direct transfer from one account to another.

If you know where the money is going and you have the option, a direct transfer is probably your best bet. Funds will be directly transferred from one account to another through the financial institutions managing the accounts, and you can rest easy.

If you have to rollover funds your employer will send you a check for your account’s amount, and you’ll have 60 days to put that money into another account before facing that nasty 10% early withdrawal fee.

The Internal Revenue Service also only allows one account rollover every 12 months, so you can get yourself into trouble if you need to transfer money more than once in a year.

“We’ve seen people create traps for themselves because they move their retirement money more than once,” Edelman says.

When in doubt, do a direct transfer and you’ll avoid a big 401(k) mistake.

There’s a lot going on when you move from one job to another, and maybe your best bet when considering your 401(k) is to not make any hasty decisions and consider it again when things have calmed down a bit. That way you can avoid some of these 401(k) mistakes.