Should you roll over an old 401(k)?
Leaving an employer can create an important decision about your retirement assets. You may be able to keep your money in your former employer's 401(k), move it to a new employer's retirement plan, roll it into an IRA, or take a distribution.
Your old 401(k) deserves a second look.
End-to-end help moving an old 401(k)—without doing it alone.
If a rollover is appropriate and you decide to proceed, PortfolioLab can help locate the account, identify and coordinate with the recordkeeper, organize the required paperwork, open the appropriate IRA, facilitate the transfer, track the rollover through completion, and help resolve issues that arise along the way.
Schedule a complimentary 401(k) Rollover Review and, before you move a dollar, I will:
Show you what your current 401(k) is costing you.
We will review the identifiable investment expenses, administrative costs, managed-account fees, and other recurring expenses associated with your existing plan.
Add professional management without increasing your management fees.
If we recommend a rollover, we will structure our advisory fee so it is no higher than the recurring annual fees we identify in your existing 401(k)—while giving you access to a broader range of investment options.
Compare your investment options.
See how the investments available inside your employer plan compare with the broader investment universe available through an IRA.
Review what you could give up by leaving the plan.
We will consider relevant plan features such as investment costs, withdrawal provisions, creditor protections, employer stock, and other benefits that may be important to your decision.
Know the comparison before you make a decision.
You will see how the existing 401(k) and proposed IRA compare before deciding whether moving the account makes sense.
I will tell you if I believe you should leave the 401(k) where it is.
The purpose of the review is to determine which option appears more appropriate for your circumstances—not simply to recommend a rollover.
Schedule a complimentary review first, or start the free rollover concierge if you already want help locating and moving an old 401(k).
What can you do with a 401(k) after leaving a job?
Depending on your former employer's plan and your individual circumstances, there are generally several alternatives to consider. For a deeper walkthrough, read what happens to your 401(k) after leaving a job.
Keep your former employer's 401(k)
Some plans allow former employees to leave retirement assets in the existing plan. This may be attractive when the plan offers competitive expenses, institutional investment options, or features you want to retain.
Move it to a new employer's plan
If your new employer's retirement plan accepts incoming rollovers, consolidating retirement assets there may simplify account management while keeping the assets inside an employer-sponsored retirement plan.
Roll the assets into an IRA
An IRA may provide access to a broader investment universe and additional flexibility in portfolio construction. Costs, services, protections, investments, and withdrawal considerations should still be compared carefully with your existing plan.
Take a distribution
Taking retirement assets in cash can create income-tax consequences and, depending on your age and circumstances, an additional tax on early distributions. Taking a distribution is different from completing a qualifying rollover.
Why might someone consider rolling a 401(k) into an IRA?
An IRA can provide additional flexibility, but whether those benefits are valuable depends on the investor and the quality of the existing 401(k). If you are comparing the two account types, see our 401(k) vs. IRA guide. Potential considerations include:
- Access to a broader range of stocks, bonds, ETFs, and other investments
- Greater flexibility in building a customized investment portfolio
- Ability to consolidate multiple retirement accounts
- Potentially simpler portfolio monitoring and rebalancing
- Ability to coordinate retirement assets with other investment accounts
- Access to professional investment management if desired
Why might keeping an old 401(k) make more sense?
A rollover can also mean giving up valuable benefits. Before moving an account, investors should understand what is available through the existing employer plan.
- Potentially lower institutional investment expenses
- Federal ERISA protections that may apply to the employer-sponsored plan
- Institutional or plan-specific investments not available in an IRA
- Loan features that may be available under certain employer plans
- Age-55 early-distribution considerations for qualifying former employees
- Potential differences in creditor protection
- Plan-specific features or benefits that would be lost after a rollover
Direct rollover vs. receiving the money yourself
Direct rollover
A direct rollover generally moves eligible retirement assets directly from an employer-sponsored retirement plan to another eligible retirement plan or IRA. The participant does not take possession of the money during the transfer.
Receiving the distribution
Having the distribution paid directly to you can create withholding, tax, and timing considerations. Federal rollover deadlines may also apply if you later decide to move those assets into another eligible retirement account.
Questions to ask before rolling over a 401(k)
Costs are only one part of the decision, but they should be understood clearly. See what your 401(k) may be costing you for a deeper look at plan, investment, and other recurring expenses.
Analyze first. Roll over second.
Moving a retirement account should solve a problem—not simply relocate an account. Understanding the investments, fees, risk, services, and features of the existing plan is an important first step.
Before you roll it over, understand what you already own.
PortfolioLab can help evaluate the investments, fees, concentration, downside exposure, and overall risk inside your retirement portfolio before you decide whether keeping, transferring, or rolling over your account makes sense.
PortfolioLab LLC is a Florida-registered investment adviser. Registration does not imply a certain level of skill or training. This material is provided for educational and informational purposes only and should not be construed as individualized investment, tax, or legal advice. A rollover may not be appropriate for every investor. Before moving retirement assets, consider the investment options, services, fees and expenses, withdrawal provisions, protections, tax consequences, and other characteristics of each available alternative. PortfolioLab does not represent that an IRA or any particular account type will be less expensive or more appropriate than an employer-sponsored retirement plan. The 401(k) rollover concierge assistance described on this page is offered at no separate charge. If you engage PortfolioLab for ongoing investment advisory services, advisory fees and other applicable account or investment expenses may apply as described in your advisory agreement and related disclosures. Investing involves risk, including possible loss of principal.