You can transfer it to a new metrocard either at a token booth or at a metrocard vending machine for 1 year after expiration (if you stick an expired card in a vending machine, it will automatically recognize that it's expired and offer you a replacement for free). Between 1 and 2 years after the expiration date, you have to snail mail the metrocard to the MTA customer service center, although token booth attendants can give you a postage-paid envelope to do so. After 2 years, I think you may actually lose the funds (although I'm not 100% sure about that).

See http://web.mta.info/metrocard/problems.htm#expired