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Chapter 19. Roll, Roll, Roll It Over > Places for Rollovers - Pg. 190

Roll, Roll, Roll It Over 190 Our Advice Say that you leave your company and you get a check for the $2,000 in your 401(k) plan. You think, "That $2,000 won't make a difference for my retirement, but it would buy a really cool sound system. Why bother rolling over such a small amount?" Do the math: That $2,000 invested for 30 years at an 8 percent return will grow to more than $20,000. And that stereo you could have bought with the money would have stopped working after a few years, anyway. Leave It! An Alternative to Rollovers Want to hear a little-known secret? Most of the time, you don't have to take your money out of your old employer's plan when you terminate employment. That's right. You can leave your money with your old plan. This way, you continue to shelter your contributions and investment earnings from taxes. However, forget about making new contributions or borrowing from it after you leave. Former employers are required by law to let you leave your money in their 401(k) plans if your balance is above $5,000. Most employers will automatically cash you out if your account is $5,000 or under, although a few might let you leave it. If your account is more than $5,000, you can leave