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Practical Planning Tip: Old 401(k) Options - Leave at Previous Employer

March 08, 2024

Today we are going to continue our discussion on what to do with money from an old 401k plan. Specifically, we will discuss Doing nothing and keeping the money where it is. So, This is the default approach since it requires the least amount of effort. However, there is rarely a compelling reason to keep your retirement assets at an old employer. There is one exception which is if you have an outstanding loan balance on your 401(k) or may want to borrow against these funds in the future. In that case, wait until it is fully paid off before moving the money to avoid complications when consolidating your funds. I’d be remiss NOT to note that borrowing from your 401(k) should always be a last resort since it derails your ability to retire.

The drawbacks of 401(k) plans are there are generally very limited investment options and lack of a personal advisor to help manage your investments based on your goals. Investors who leave funds in old 401(k) plans typically find themselves approaching retirement with a smattering of old retirement accounts from previous employers that have an incoherent investment strategy. It’s a cumbersome mess that makes planning for retirement more difficult. It behooves most investors to take 15 minutes to move these funds to keep their financial life organized.

As I tell my clients, “Doing nothing is a decision, and it is usually the wrong one.”

You can WATCH the full video here.