Benefits and Considerations of 401(k) Rollovers

401(k) rollover decisions require careful comparison of fees and investment options before choosing between leaving funds in place, rolling over to a new 401(k), or using an IRA.

### Weighing the Pros and Cons of Rolling Over Retirement Accounts
* 🔄 Many individuals face the decision of what to do with **old retirement accounts**, such as a **401(k)** and a **403(b)**, especially after **changing jobs**.
* 💼 Kade has options: he can leave his old accounts as they are, **roll them into his new 401(k)**, or consider a **rollover into an IRA**.
* 💰 It's crucial to avoid cashing out, as this incurs **ordinary income taxes and a 10% penalty**, which can **significantly diminish retirement savings**.
* 📊 When deciding on a rollover, Kade should research the **investment options and administrative costs** of his old and new plans to determine which is **more beneficial**.
* 🔍 If the old 401(k) offers **better terms**, it may be wise to keep it, while a poor plan could make an IRA rollover appealing due to **increased control over investments**.
* 💸 Retirement plans come with fees, which are often overlooked; Kade should obtain **fee disclosures** to compare costs between his **current and old accounts**.
* 📝 Utilizing resources like money.com/resources can help Kade navigate this decision-making process effectively, ensuring he makes an **informed choice about his retirement savings**.

What are the benefits of rolling over a 401(k)? I have retirement accounts from previous employers: a 401(k) and a 403(b). What are the pros and cons of rolling them over to the same institution where my current 401(k) lives?

The accounts Kade mentioned are an old 401(k) and 403(b), and now he has a new 401(k) at his current employer. Should he leave them be, or roll them over?  They also mentioned...

...another point: he's considering an IRA rollover at the same institution as his current 401(k). Did you hear that? I didn't hear that, but wasn't that the last part of the question? Well, he asked...

...what are the pros and cons of rolling these accounts over to the same institution? Yes, we didn't specify an IRA. Maybe it's about IRAs specifically, but that's not what I saw. Many people face this decision: we change jobs, move to a new role, and have this old 401(k) left behind. We decide what to do with it. We really have four options, but...

...it's not really four options because I'm going to eliminate one: we don't cash it out. Cashing out your 401(k) means paying ordinary income taxes and a 10% penalty. So then you ask...

Question: Okay, well, what can I do? Well, I've really got three things I can do: I can leave it where it is, at the current institution, under the current structure; I can roll it into the new 401(k), new provider, and invest there; or I can

roll it over into an IRA. I can just open up a rollover IRA and roll it into there. So, when I have those three options that I get to choose from, how do I decide which one I should do? First of all, you also need to make sure you have enough

in the old 401(k). They don't automatically just distribute it to you; they take away your choice. So, do a little research on that. But always, you have to do the research, do the homework: How good are the investment options? What are the administrative costs within the

plans? And if you figure out that your new plan is just as good, if not even better, I don't see any problem with you rolling it into the new 401(k), because that still allows you, especially if you're higher income, to continue to do backdoor

Roth contributions. Um, but if you find that your old 401(k) is bad, your new 401(k) is bad—probably set up by the golf buddy of your company owner—and you just, like, I just do not love this is where this is going to hold the majority

of my retirement assets—that's when probably an IRA rollover does kind of stand out, because you control who you work with, what you get to invest in. But you've got to do the work; you've got to figure out—that's why we do—if you go to

money.com/resources. We actually have a really good resource to help you go through a decision matrix on whether you should keep the money where it is. Because maybe you work for, or previously worked for, a Fortune 500 company and have a really low-cost 401(k),

I don't want you rolling it over just for the sake of consolidation to your new plan if it's a bad plan. Right? You've got to do the research to know if it's good, and I don't want you immediately, automatically going into an IRA

rollover at your favorite institution because you might be cutting off certain planning opportunities. So you've actually got to—don't skip leg day—do the homework and actually go through our worksheet that we've got on money.com/resources. I think one thing that often

gets overlooked is people think, 'Hey, I've got this 401(k) plan or this 403(b) plan; I'm not paying any fees on that.' No, man, that's not true. Uh, all retirement plans do have some fees. So even when you're assessing,

don't just look at the investment options and don't just look at the institution; look at the actual fees you're paying. You can pull the 404(a) disclosure, or often there's a 408(b)(2) disclosure. You can ask for those

from your HR department and they'll walk you through what fees you're paying on this retirement account. You want to compare the old one to the new one because if you can save money on fees, that's more money that's going to

Stay in your back pockets; that's another thing to assess as you go through this investigation.

"I Have WAY Too Many Investment Accounts!"

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The Money Guy Show

Initial Question: 401(k) and 403(b) rollover options

Inquiry about the benefits of rolling over a 401(k) and 403(b) to a current 401(k) institution.

Clarification of the accounts involved: old 401(k), 403(b), and a new 401(k).

Confirmation of the question regarding IRA rollover consideration.

Discussion of the four options, excluding cashing out due to tax penalties.

Three main rollover options and decision-making factors

Three options presented: leaving the account, rolling into a new 401(k), or rolling into an IRA.

Importance of sufficient funds in the old 401(k) and research on investment options and administrative costs.

Recommendation to roll into a new 401(k) if it offers comparable or better options, especially for higher-income individuals.

Suggestion to consider an IRA rollover if both the old and new 401(k) plans are unsatisfactory.

Emphasis on thorough research and using resources like money.com/resources for decision-making.

Warning against automatic rollover to avoid potentially missing planning opportunities.

Highlighting often-overlooked fees in retirement plans.

Importance of comparing fees between old and new plans using 404(a) or 408(b)(2) disclosures.

Emphasis on saving money on fees for increased retirement funds.