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Have 4 different 403(b)/401(k) due to changes in employer. Would there be an advantage to combining the accounts?

Feb 26, 2017 in  |  Flag
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Depends on your goal. You do forfeit some benefits that are worth considering before transferring. Also, most advisors never talk about the benefit of maintaining the 401k/403b loan option whereas the IRA does not allow for this. Most 401k/403b employer sponsored plans have institutional pricing. Drawback is the funds within the plan are all you have to choose from. Once you transfer the funds out of the plan you can never move them back. Make sure you talk to someone that you believe has your best interests in mind, not theirs.

Comment   |  Flag   |  Mar 04, 2017

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If you don't need a 401(k) loan and you're interested in simplicity, then yes it probably makes sense to consolidate them in an IRA. In any event, here are some pros/cons:

Pros: - 401(k)s may have administrative fees and an IRA may have a better cost structure. This should be evaluated on a case-by-case basis to make sure you're getting the best deal. - By maintain a single account you can take advantage of economies of scale as it pertains to trading costs. - IRAs may have access to a broader universe of investment options. - When it comes time to process Required Minimum Distributions, a single account will greatly ease the administrative burden. - Roth IRA conversions are very easy to perform and should be considered as part of your long term financial plan.

Cons: - 401(k)s may have access to mutual funds (and mutual fund share classes) that you would not have on your own. - A 401(k) may allow you to take a loan against the principle balance. - Your investment strategy and asset allocation can be put on auto-pilot with the rebalancing interval you set. With an IRA the burden would fall on your or your advisor.

Of course, if I can provide any further information or clarity, please feel free to reach out.

Adam C. Harding, CFP 480-205-1743

Comment   |  Flag   |  Mar 15, 2017 from Scottsdale, AZ

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Vinny Dallo Level 1

Consolidating your retirement plans from previous employers may make sense, but a careful review of your plans should be conducted first. A few points to consider...

Do any of your retirement accounts offer a "fixed interest" position? I have some clients who keep their money in former employer plans because the fixed option has a guaranteed interest rate that they cannot get elsewhere (ex: 3.0%).

What are the share classes of the funds in your 401(k)/403(b), and what are those expenses?

Who is helping you manage those accounts?

The topic of loans was addressed in previous responses, but if you left those employers, then the issue of borrowing from your retirement plan is moot. Most, if not all, 401(k) plans do not allow former employees to take loans from their accounts.

You should consult an experienced financial adviser before making any decision.

Comment   |  Flag   |  Mar 15, 2017

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Simplicity + Saving trees + controlling how your money is invested rather than being at whim of plan sponsor. Good luck!

Comment   |  Flag   |  May 28, 2017 from Boston, MA

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