Commentary · Commentary
Keep Track of Old 401(k)s Before Deciding Whether to Move Them
Written by the William Allan team · Published
Changing jobs can leave retirement accounts at several former employers. That deserves an occasional review, but the account’s location alone does not tell you whether it is a problem.
An old account can remain invested and continue participating in market gains and losses. Leaving an employer does not, by itself, stop compounding. The concern is losing track of the account’s investments, costs, beneficiaries, and required actions.
Find out what you have
Gather the statements, update contact details, and check how to access each account through the plan’s approved process. If you cannot locate an account, start with the former employer or plan administrator.
Then review the facts.
- What investments does the plan offer, and what do you currently hold?
- What are the total investment and administrative expenses?
- Are the beneficiary choices current?
- What distribution rules apply?
- Is there employer stock or an outstanding loan that needs special attention?
- How does the account fit the rest of the household’s retirement assets?
Some old plans have attractive institutional investments and negotiated expenses. Others have costs or restrictions worth comparing with alternatives. You cannot tell which applies from the fact that the account is old.
Compare the available choices
After leaving a job, common choices include leaving eligible assets in the former plan, rolling them to a new employer plan that accepts them, rolling them to an IRA, or taking a distribution. Plan rules and the nature of the assets affect which choices are available.
Taking cash can create income tax and an additional early-distribution tax, depending on the account, age, and applicable exceptions. A properly completed rollover may avoid current tax, but a conversion to Roth or another special circumstance can change the result. IRS rollover guidance.
An IRA may provide more investment choices. It may also have higher costs than the plan, different creditor protections, and different withdrawal rules. Moving an account can affect useful plan features or the tax treatment of employer stock. Keeping the existing plan can be a reasonable decision.
Consolidation can simplify administration, but it is not automatically better. Compare costs, services, investments, legal protections, distribution rules, and taxes before deciding. FINRA’s discussion of rollover comparison factors.
Consider who gets paid
William Allan can help gather account information and compare choices. The firm generally charges asset-based fees, so rolling assets into an IRA managed by William Allan may increase compensation to the firm and the financial professional servicing the account.
That is a conflict of interest. It belongs in the comparison alongside the services, investments, costs, protections, and alternatives. The firm’s disclosures are available through its public filings.
A review can end with keeping the account
The point is to know what you own and why it belongs in the plan. A review may support a rollover. It may support keeping the account and updating the investments or beneficiary information. It may show that the existing arrangement still fits.
There is no fixed dollar saving from consolidating and no automatic loss from leaving a suitable account with a former employer. Make the decision from the comparison, not from the number of statements arriving.
Schedule a first call. The first conversation is an intake call with Ian, who gathers your situation and helps connect you with the appropriate advisor. It is not an advisory meeting.
This commentary is for informational purposes only and is not investment, tax, or legal advice. All investing involves risk, including the possible loss of principal, and past performance does not guarantee future results. Consult qualified tax and legal professionals regarding your situation. William Allan is an investment adviser registered with the SEC; registration does not imply any specific level of skill or training.