Managing Your Meta 401(k) When You Retire
You spent years building up your Meta 401(k) to prepare for retirement. Now you're ready to make the leap, and the question is: what do you do with it? This is one of the most consequential financial decisions you'll make. The choices you make with your 401(k) in the months before and after retirement can affect your tax bill for years to come.
In this guide, we’ll walk through what your options are, how to evaluate them, and what mistakes to avoid along the way.
Understanding Your Options
When you retire from Meta, you have four options for what to do with your 401(k). Each comes with different rules for taxes, withdrawals, and long-term implications.
1. Leave It in Meta's Plan
Meta's 401(k) plan, administered by Fidelity, allows you to leave your money in the account after you retire. Using this option, you will have the same investment options you had as an employee, including the plan's low-fee funds. Essentially, your 401(k) options will remain unchanged, except that you will no longer be able to make new contributions.
Staying in-plan also lets you use the rule of 55. Under normal 401(k) rules, you cannot make withdrawals from your account until age 59½. However, if you retire at age 55 or later, the rule of 55 gives you penalty-free access to your savings right away. If you remove your funds from the Meta 401(k), you will lose this benefit, giving employees considering early retirement a good reason to leave their savings at Meta.
The main drawbacks are that:
You can no longer contribute to the account
Your investment choices are limited to what the plan offers
Any contributions made on a pre-tax basis will be subject to required minimum distributions (RMDs) later on.
2. Roll Over to an IRA
Rolling your 401(k) into an IRA is the most common path for retirees, and for good reason. Done correctly, it is not a taxable event, and it opens the door to more investment options than an employer-sponsored 401(k).
Pre-tax funds roll into a traditional IRA.
Roth 401(k) funds roll into a Roth IRA tax-free. (This includes any balance you built through Meta's mega backdoor Roth strategy).
If you want to convert pre-tax funds to a Roth IRA, you can, but you'll owe ordinary income taxes on the converted amount in the year you do it. The early years of retirement can be the perfect time for this, when your income will likely be lower than it was during your working years.
One important note: If you take an indirect rollover, meaning that a check for the balance is made out to you, Fidelity is required to withhold 20% for federal taxes. You would then have 60 days to deposit the full original amount (including the 20% withheld, which you would have to pay out of pocket) into an IRA. Failing to do so would result in taxes and penalties on the shortfall. Always opt for a direct rollover, wherein the money is transferred directly to a new custodian.
3. Move It to a New Employer's 401(k)
If you take on a part-time job or consulting work at a company that offers a 401(k), you may be able to roll your Meta balance into that new plan. This keeps your savings consolidated in one place. Whether this makes sense depends on the new plan's investment options, fees, and rules. You’ll want to compare the options carefully before making this move.
4. Cash It Out
Cashing out is almost always the wrong move. Any amount you withdraw is taxed as ordinary income in the year you receive it, and if you're under 59½ (or 55 per the rule of 55), you'll also owe a 10% early withdrawal penalty on top of that. For someone who has spent years building a substantial balance, the tax hit can be significant. Unless you're facing a genuine financial emergency, this option should be off the table.
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Making Your Decision
Choosing what happens to your Meta 401(k) depends on factors unique to your circumstances. There’s no one-size-fits-all solution. Here are the key factors to weigh as you decide.
Early Retirement
Will you need to tap your retirement savings before age 59½? If you're retiring between 55 and 59½ and anticipate needing that money, keeping your 401(k) in Meta's plan may be best. Once you roll the funds to an IRA, that option is gone.
Tax Planning
What does your current tax rate look like now compared to what you expect in the years ahead? If you anticipate moving into a higher bracket once Social Security and RMDs kick in, Roth conversions in the early years of retirement can make sense despite the upfront tax cost. If you expect your rate to stay low, prioritizing a traditional account may serve you better.
Investment Preferences
Do you want access to a broader investment universe, or are you satisfied with what Meta's plan provides? Some retirees prefer the simplicity that a 401(k) plan can provide. Others want complete control over their portfolio. A rollover IRA puts more responsibility on you, while leaving funds in Meta's plan often keeps things more hands-off.
Fee Sensitivity
Meta's 401(k) offers some of the lowest fees around for institutional funds. Are you ready to shop around for competitive investment options outside the plan, or do you value the institutional pricing already built into Meta's 401(k)? The answer may vary depending on which IRA provider you're considering.
Common Mistakes to Avoid
Even a well-intentioned 401(k) decision can go wrong if you're not careful. Here are the most common mistakes to watch out for.
1. Making a Rushed Choice
This isn’t a decision you have to make right now. Your money can stay in Meta's plan while you take time to think through your options. The real danger is making a hasty choice that triggers an unnecessary tax bill or cuts off access to funds you might need. If you're not sure where to start, a fee-only fiduciary financial advisor can help you think through the right move for your situation.
2. Rolling Over Before Taking a RMD
When you're required to take an RMD, it must be taken for the year before completing any rollover. RMD amounts cannot be rolled over. Rolling over funds that should have been distributed first is a mistake that can trigger penalties.
3. Leaving a Rollover Sitting in Cash
When funds arrive in a new IRA, they don't automatically get invested. They sit in cash until you tell the account what to do with them. Leaving a large rollover in cash for months or years is a missed opportunity for growth. Once your rollover lands, choose your investments promptly.
4. Cashing Out to Cover Short-Term Expenses
It's tempting to treat a 401(k) balance as a source of liquidity in retirement, but withdrawing large sums triggers ordinary income taxes and can push you into a higher bracket for the year. Plan your retirement income carefully so that you're drawing from your accounts in a tax-efficient way, rather than making large, unplanned withdrawals.
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Make the Right Call for Your Retirement Plans
What you do with your Meta 401(k) will impact your retirement plans for years to come. Getting this right from the start can make all the difference in how long your savings last and how much you keep.
Decide what to do with your Meta 401(k) when you retire
Build a distribution strategy that minimizes taxes and makes your savings last
Coordinate your 401(k) with Social Security and other income sources
Plan for RMDs before they begin at age 73 or 75
Manage the shift from saving to spending in a way that fits your goals
Schedule your free 15-minute introductory call today, and we can get started on a plan that works for you.
Meta 401(k) FAQs
Can I roll my Meta 401(k) into an IRA while still working at Meta?
Generally, no. Most 401(k) plans, including Meta's, don't allow in-service rollovers to an IRA before age 59½. Once you retire or otherwise separate from Meta, you can roll over the balance at any time.
When do I have to start taking RMDs from my Meta 401(k)?
This varies based on your birth year.
If you were born between 1951 and 1959, RMDs begin at age 73.
If you were born in 1960 or later, RMDs begin at age 75.
Note that RMDs only apply to traditional (pre-tax) 401(k) contributions and earnings. Roth 401(k) balances are no longer subject to RMDs during the original owner's lifetime, a change that took effect in 2024 under SECURE 2.0.
Can I convert my Meta 401(k) to a Roth IRA after I retire?
Yes, but the conversion is taxable. The amount you convert is added to your ordinary income for the year, which can push you into a higher bracket if you convert too much at once. Many retirees do partial conversions over several years to manage the tax impact.
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