Deciding to Rollover your Retirement Plan

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Having just changed jobs, the decision of what to do with my former employer’s 401(k) plan has been weighing heavily on my mind and so it was very fortuitous when I read a recent CNN Money headline article about the three “options” you have in this decision. I wrote an article a few weeks ago detailing the process of rolling over a 401(k) plan into another 401(k) plan but that’s only one of three options you have. The other options are to do nothing or to roll it into an individual retirement account (IRA).

The first option of doing nothing is merely the status quo and technically what I’m doing right now. If you aren’t entirely sold on your new employer’s 401(k) options and you weren’t content with your former employer’s choices, moving it into an IRA can solve these problems. Personally, I haven’t had the time to review my options in depth so I’ve just left everything alone until I do. If I look into my new 401(k) and don’t like what I see then the last option is to roll it into an IRA. The downside explained in the article is that the mutual fund options you have will likely be higher but you do get the option of potentially converting the IRA into a Roth IRA.

Right now I’m leaning towards moving all my retirement assets into my new employer’s 401(k) but I’ll need to take a closer look at the funds, the fees, etc. before I jump into that process.

via CNN Money.

{ 4 comments, please add your thoughts now! }

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4 Responses to “Deciding to Rollover your Retirement Plan”

  1. CK says:

    If you’re still eligible why not convert to a Roth? You’ve certainly got time to make back the tax hit. Plus why lock yourself in to your new employers options when you can have limitless options with an IRA. I don’t buy the “advantage of institutional pricing” you can certainly find plenty of low cost options on your own, no sweat.

  2. FMF says:

    I ALWAYS have converted mine to IRAs. More investment options, more control, and lower costs.

  3. Matt says:

    I’ve never found an employer plan that offered the kind of funds I wanted to be investing in. Hence I’ve always rolled into a personal IRA, with the money in index funds. Low overhead, better long-term results than any managed fund will ever offer me…especially since my IRA is a “fire and forget” account.

  4. I always kind of thought along the lines of FMF…as soon as I leave my company I want to move it over to an IRA. Like FMF said, more options, more control, and lower costs. Plus it’s not tied to your employer in anyway…

    Converting it to a Roth is not something I’d weight heavily…since an IRA is similar to 401s from a tax perspective…I believe.

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