Smart Money Podcast: Renters Are Struggling, and What to Do With an Old 401(k)

Liz Weston, Sean PylesAug 31, 2020

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Welcome to NerdWallet's Smart Money podcast, where we answer your real-world money questions.

This week’s episode starts with a discussion of , who are really struggling in this economy. Renters tend to have lower incomes and spend more money on housing, which means they often have less of a cushion against financial setbacks. Renters facing eviction may be able to negotiate with their landlords, research their rights in an eviction and find emergency assistance by contacting .

Then we pivot to this week’s question from Kelly, who says, "I changed jobs 18 months ago and never rolled my old 401(k) over to my new company's account. I was preparing to do so and then the stock market crashed due to COVID and my balance went down. Would you recommend waiting until the balance recovers a bit or rolling my old account over regardless, so both accounts can compound together?”

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Consolidating your retirement accounts can have some advantages, especially if your new plan is a good one and your employer allows you to transfer your old account (most do). You won’t necessarily get better returns, but consolidating means you won’t have to monitor two accounts or worry about overlapping investments. (Having too much of the same kind of investment could mean you’re not diversified enough.)

You shouldn’t wait to do a rollover because you’re trying to time the stock market. That rarely works. Instead, arrange a direct transfer of the money from your old account to the new one. If the old plan makes a check out to you, rather than to the new account, then 20% of the money will be withheld. You would have to come up with that 20% out of your own pocket to avoid on that portion.

You also have the option of rolling your old account into an IRA. That could be a good choice if you want more investment options, but you may have access to cheaper funds in your workplace plan.

Know your options. When leaving a job, you may have several choices. including leaving the money where it is, transferring it to a new employer’s plan or rolling it over into an IRA.

Weigh your options. No single choice is right for everyone. Think about what makes the most sense for your situation and goals.

Don’t worry about getting the timing right. Timing the market doesn’t work, so don’t delay action on an old account waiting for a rebound.

More about 401(k) rollovers on NerdWallet:

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