When you leave your job to go back to graduate school, you have several options for what to do with your 401(k) account. Cashing out the 401(k) should be carefully considered, as it may subject you to tax penalties of up to 10%. Instead, transferring the funds to a low-cost or no-cost fund, or rolling over the 401(k) into an IRA, can be advantageous and help you avoid these penalties.

If you need to access the funds due to unemployment, it's important to approach this decision carefully, considering the associated taxes and potential penalties. One option to note is that IRAs allow for an exception to the early withdrawal penalty for certain college expenses. Therefore, consulting with a financial advisor to discuss your specific circumstances and determine the best course of action would be prudent. This will help you understand the rules and options available to you, as well as the necessary paperwork and documents needed to access your funds.

Please consult with a financial advisor who can provide personalized advice based on your specific financial situation and goals.

Sources

Leaving Job to go back to school: What do I do with my 401k? : r/personalfinance - RedditCan You Withdraw from a 401K for Education? | Bright Horizons College Coach BlogWhat to Do With Your 401(k) or 403(b) When You Start Grad SchoolCan I Access Money in My 401(k) If I Am Unemployed? - Investopedia401(k) & working for only a year before returning to school - Bogleheads.orgHow To Withdraw Money From A 401(k) Early - Bankrate

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