You can leave a 401(k) with your old company

You're mad as hell and you are going to take it: Your 401(k) money, that is.

As the jobless rate continues to increase, more laid-off workers are faced with the decision of what to do with the assets in their old employer's 401(k) plan.

In most cases, they can leave the money in the account, even if they are no longer employed by the company. But they also can roll the money out of the plan and into their own IRA.

"The first thing I would do is look to see what advantages there are to your employer's plan," says financial writer Mary Rowland. "Then decide whether to roll it out or not."

Rowland, author of "The New Commonsense Guide to Your 401(k)," recognizes that an immediate reaction for some fired workers is to get the money out of the 401(k) because they harbor a grudge against their old employer.

But she says cool off and look over the plan first. Some 401(k)s offer benefits for those in the plan. For example, the company might offer an annuity option and might subsidize it, she says.

For those between ages 55 and 59½, keeping the money in your employer's 401(k) has one huge benefit. The IRS allows fired or retired workers older than 55 to withdraw money from a 401(k) without paying a 10 percent early-distribution penalty. If you roll the assets into an IRA, you cannot tap the money without paying a penalty until you are 59½. The key fact here is you must be older than 55 when you leave your job.

If you decide to take control of your 401(k) assets, Rowland says make sure you roll it into an IRA and not a regular savings or checking account.

Unless you are older than 59½, putting the 401(k) assets into a nonretirement account means you will likely incur an early-distribution penalty and also have to pay income taxes on the full amount in the 401(k).

But Rowland recognizes that taking control of the money can help heal the psychological wounds of being fired.

"If you are waking up in the night, and saying, 'Oh, I hate that company, they have my 401(k) money,' if you're bitter and really want to make a break with it, just take it," she says. "The economy has been so troublesome and grim, at least if you have your money in your own IRA, you can sleep better."