When should I move my 401(k) over to my new job?

December 6, 2013
Is it a bad idea to leave a 401(k) account just sitting at an old job? Can I just leave it there indefinitely? Are there any problems with doing that?

Advisor answers

The best solution is to directly roll your old 401k over to an IRA at one of the large custodians: Vanguard, Fidelity or TD Ameritrade to name a few. An IRA will give you a larger number of investments to choose from than a 401k plan. Also, IRAs frequently have lower costs than 401ks.

One advantage to rolling your old 401k to your new employer's 401k is that the new 401k may allow you to take a loan against your account. An IRA does not allow for loans.

There are a few issues with leaving your old 401k...

Chris Long

Chris Long


That is a great question that I get often. There are a couple of things to think about.

In most circumstances rolling your old employer plan into IRA is probably the best option. That option allows you to access low cost funds from places like Vanguard and Fidelity that may not be available in your old employer plan. It also makes it easier for you to keep up with the money, if you change addresses etc.

If you are thinking about rolling your old employer plan to a Traditional IRA and your Adjusted Gross In...

Congratulations on your new job! As far as timing of moving 401ks, your primary concern should be the treatment of a "non-employment" account at your current provider. Most plans do not have an issue with your funds remaining even though you have not because they are making money off of your balances. But there are a few plans that have penalties for non-employees, so you want to make sure that you do not get penalized for waiting.

As far as rolling your funds into your new 401k, this is an option; however, it might make sense to...

The best choice can really vary depending on the specifics of your circumstances. Here are the questions to ask yourself:

Which plan has the lowest costs with the ability to create adiversified portfolio?

401(k) plans have received a lot of criticism for being expensive, but some plans are very cost effective. By participating in the plan you may actually be able to participate in very low expense ratio funds you wouldn’t otherwise have access to. Some employers also pay all theadministrative costs of the plan. Note: Cost eff...

To answer your questions specifically. 1) In my opinion, yes it is a bad idea to leave your 401k at your old job. More than likely you will get better results by rolling it over to an IRA and working with a financial advisor. 2) Most likely yes. 3) Probably not but again, I don't think this is your best option.

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Only certain unique situations would call for me to recommend a client move their old 401k to a new company's 401k. Most of the time, a Rollover IRA is a better option but its a case by case review. You have a much better option in a Rollover IRA. 401k Plans have many flaws; high fees and poor fund selections are two big ones. When you are working for a company, you have no choice, you have to invest in their plan and use their investment or fund line up. However, when you leave that company you have the...

Your present age has a bearing on answering this question directly. Without knowing how old you are, the response must be general in nature. In addition, you should seek some personalized financial counseling to get your best answer. Here's why.

There is a little used section of the Internal Revenue, Code 72t, that allows withdrawals from a retirement account at ages 55 and 59 1/2 while avoiding the onerous 10% early withdrawal penalty. This provision can be used from company 401(k) plans and 403B plans, but does not apply to SEP IRA's...

Al Kaufman

Al Kaufman


Your timing may depend on whether you choose to assess the merits of your new retirement plan. Moving your 401(k) to another qualified plan, such as another 401(k) offered by a new employer may be beneficial, but you may want to evaluate your investment alternatives and other features first. Maybe the offerings with the new employer are not very strong. You could also move [rollover] the assets to a traditional IRA—which would generally allow more investment alternatives to choose from. When moving the assets from a prior plan, make...

Guy Baker

Guy Baker


Most 401ks have a minimum that they kick out, otherwise you can leave it. One problem is often forgetting about it and your family having trouble finding it or knowing it exists. So make sure you have good documentation to prevent this from being a problem.

Why do you want to keep it there? If you can answer that question with logic - then it might be a good idea. Frankly, I would roll it to an IRA with a good custodian (TD, Schwab, Fidelity) and hire a good advisor to manage it for you. Pick a fee based advisor who believes in passive...