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401K with former Company?

I have a 401K account with a former company. I have been at my new company for 6 months. What am I losing out on by keeping it with my former company and not rolling it over into my 401K at my new company? If I move companies often should I keep rolling the 401Ks over or just combine them once I feel I am going to stay put for a while?

Jan 06, 2012 by Tyler from Washington, DC in  |  Flag
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Barry Rabinowitz Level 19

Hi: since the old company is not providing matching contributions, lthe only reason to keep the funds with them would be the outstanding investment choices. Barring that,I would suggest a trustee/tustee rollover to an Individual Retiement Account. That way you would be in charge of he investments or could hire a manager who would have thousands of investment choices-many of which would be alot lower cost than the 401k plans. You could use low cost ETF's,which most 401k plans do not offer.

Comment   |  Flag   |  Jan 06, 2012 from Fort Lauderdale, FL

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Tyler, the only advantage to keeping an old 401(k) with a former company would be if there were enough investment options to properly manage it or the options are not available outside the 401(k). Other than those two reasons, I would recommend opening up a Rollover IRA and have the assets transferred directly from the 401(k) trustee to the rollover IRA trustee. This will avoid any tax issues/penalties. I would then recommend researching funds/ETFs to invest in or find an independent financial advisor who can help you manage the account. It really just comes down to the investments in your former employers 401(k) vs options you have outside, which is unlimited.

Comment   |  Flag   |  Jan 06, 2012 from King of Prussia, PA

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