Don’T Forget Your 401(k) in Changing Jobs
Posted on Thursday, October 1st, 2009
The ability to roll your existing 401(k) into the new employer’s plan carries both benefits and potential drawbacks. One of the benefits is that this option may be easier than rolling the money into a self-directed IRA, especially if you do not currently have an IRA established. One potential drawback is that you may not be able to accuracy assess the quality of the investment options at your new firm. If you plan to take this route it is a good idea to ask for a list of the mutual funds used by the plan, and to carefully research the performance histories of those funds.
The third option is to roll the money in your 401(k) plan into a self-directed IRA plan. This option makes a lot of sense, especially if you currently have a good IRA plan with a brokerage firm or mutual fund company. Rolling the funds into an existing IRA plan is a relatively straightforward process, and the new custodian of the funds will be happy to provide the necessary forms to make the transfer easier.
And in the case of an existing IRA you probably already have a good feel for the performance of the funds. This history can give you a certain comfort level and reassurance that your money will be in good hands.