When you leave an employer, you have the option of cashing out your 401(k) plan and receiving a lump sum withdrawal. However, it might make sense to avoid doing so if you can afford it.  When you empty out your 401(k), it will typically be considered a taxable event and you’ll likely owe income taxes on the withdrawal amount. If you’re under 59 1/2, you could also be subject to a 10% early withdrawal penalty. Instead, you may want to consider rolling over your account to a new IRA.