Benefits of a 401k Rollover
If you have a 401(k), and you are changing jobs, make sure you do not forget about it. You are risking a lot by ignoring it or forgetting about your 401(k). Even if you just have a few thousand dollars, that is a lot of money. You do not want to lose it.
What can you do with your 401(k) from your old employer? You have three basic options. You can either cash it out, rolled over into your new 401k, or rolled over into a new IRA. Cashing out is a very poor option. Not only will it remain set aside for retirement, but you will lose a ton of money to penalties, fees, taxes, etc. I highly recommend not cashing out your 401(k).
Rolling over into your new 401(k) is an option, but it is not as good of an option as rolling over into a new IRA. With a new IRA, you get to choose what funds are invested in. With a 401(k), you have to invest in the funds offered by the provider of your employer. Yes, you’d have to anyway with new funds going to your 401(k), but once you have the option to change, you should take it.
Your 401(k) has the possible benefit of getting an employer match. This is an incredible benefit, but at this point, your old account is not receiving any more employer match and you could probably make more money by choosing your own funds with the bank or investment brokerage firm. Work closely with your bank or brokerage firm to choose an optimal fund for you in your retirement account.
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