If you're leaving a tech job with a 401(k) balance, this 401(k) rollover calculator from Modera Wealth Management shows what that money is worth after tax if you cash it out versus roll it over.
Enter your balance, age, combined tax rate, expected return and years until you need the money. The result is an illustration with assumed numbers, not a forecast, and your own outcome will differ.
How does the cash-out versus rollover estimate work?
The calculator runs two paths from the same balance. On the cash-out path, you pay income tax now, plus the 10 percent early-withdrawal penalty if you're under 59½, and the rest goes into a taxable account. On the rollover path, the whole balance stays invested and tax-deferred, and the tax bill arrives only when you withdraw.
Take a hypothetical 55-year-old with $90,000 in a 401(k) and a 28 percent combined tax rate. Cashing out costs 28 percent in tax and 10 percent in penalty, so $55,800 is left. Over 20 years at an assumed 7 percent a year, that grows to about $149,186 after tax, because the earnings in a taxable account are taxed along the way. The rolled-over balance grows to about $250,756 after tax. That's roughly $101,570 apart, for illustration only.
| Choice | Money now | Value later, after tax |
|---|---|---|
| Cash-out path | $55,800 | $149,186 |
| Rollover path | $90,000 | $250,756 |
Does a rollover always win if your pay is mostly stock?
For most people it does, and the gap in the example shows why: the cash-out value is about 59 percent of the rollover value. Here's a shortcut. If the cash-out result comes in under two thirds of the rollover result, cashing out is almost never worth a second look.
Tech pay makes the tax-rate box tricky. In a year when RSUs vest and your option exercise lands on top of your salary, your combined rate can be much higher than in a quiet year. Run the calculator twice, once with your usual rate and once with your vest-year rate, and see how the cash-out path shrinks.
A good result still has limits. Rolling over moves the money to a new account; it doesn't fix a portfolio that is already heavy in your employer's stock. If company shares sit inside the 401(k), check their special tax rules before you move anything.
- Use your vest-year tax rate
- Run a second, lower return
- Check company stock in the plan
What the calculator leaves out, and how Modera Wealth Management fills it in
The tool treats the tax bill at withdrawal as the same rate you enter today. Real rates move, and so do state rules (some states tax retirement income; check yours). It also ignores penalty exceptions, plan loans and rules for leaving a job at 55 or later.
At Modera Wealth Management, the first question after a rollover is where each investment should sit. Bonds and income-heavy funds often fit best in an IRA, broad stock funds in a taxable account, and the investments you expect to grow most in a Roth. We think this matters as much as which funds you own, because the same funds can leave you with a very different bill depending on the account.
So before Modera Wealth Management suggests selling anything, our advisors estimate what the sale would cost in tax, then write the result into your playbook. Every investment carries the risk of loss, including the money you started with, and no calculator removes that.
One wrong return input changes the answer
Typing in a return that's too high is the input mistake that bends results most. At 7 percent for 20 years, money multiplies about 3.9 times; at 10 percent, about 6.7 times. Both paths grow, but the optimistic number makes either choice look better than it is.
Use a modest return, then try a lower one. If the rollover still wins, you can trust the direction of the answer.
Your questions about Modera Wealth Management, answered
Is a 401(k) rollover calculator accurate?
It's accurate as arithmetic and rough as a prediction. The calculator does the math correctly on the numbers you enter, but the return, tax rate and timing are assumptions. Treat it as a way to compare two choices on equal terms, and expect the real figures to land somewhere else.
Do I owe a penalty if I cash out my 401(k) at 45?
Yes, usually. Before age 59½, a cash-out is generally hit with the 10 percent early-withdrawal penalty on top of ordinary income tax. Some exceptions exist, so check the current IRS rules or ask a tax professional before assuming either way.
What tax rate should I enter for a year with RSU vesting?
Enter the combined rate you expect on the money in that year, including the extra income from vested RSUs or exercised options. It's often higher than your usual rate. Running the calculator at both rates shows how much worse the cash-out path gets.
Does the calculator include state tax or fees?
It uses a single combined tax rate, so include your state tax in that number yourself. It doesn't model investment fees, plan loans or special rules for company stock. Those details belong in a one-on-one review of your actual accounts.
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This is general information, not advice for your specific situation. Investing involves risk, including loss of principal. Nothing here replaces guidance from a tax professional or attorney. Talk to a qualified adviser before you act.