Rollovers and Transfers from 401k plans

If you are one of the many employees who has been hit by the economic recession then this does not mean the end of your 401k plan.

If you have changed employer recently, and your new employer offers you a 401k plan, then you can make a transfer, without incurring any penalties. The first thing that you need to do is ask your new employer whether the 401k plan he offers, can take rollovers from other plans.
If his answer is yes, then what you need to do is ask for instructions relating to where the funds from the old 401k plan can be sent. Next you should have a word with your old employer, and ask for a form which is necessary to complete the transfer from one account to another. It is good to know that the transfer will be completed without your incurring and charges or penalties.

If you are changing employer, you may decide to keep the old 401k plan and open a new one with your new employer. The only restriction is that the amount that you keep in the old plan, should not be less than $5000. If the balance is less than that, then the plan sponsor may give you the option to transfer your saved balance into either an IRA, or the 401k plan that you will open with your new employer.

If you are not changing employer, but maybe your employer decided to trade the 401k plan he used to offer for a new one, which you don’t like you will end up a bit stuck. This is because 401k plans only allow you to make rollovers, unless you have terminated your employment.

If therefore your employer decides to switch plan, you will have to rollover the lump sum of money you have saved in the old one, into the new version.

Reference: http://www.401khelpcenter.com/faq/faq_main.html