Author: Paul A. Carl, CHSA, CPFA™Vice President, Retirement Plan Consulting, Registered Representative
A 2019 Bureau of Labor Statistics (BLS) study reported that Americans held an average of 12 jobs throughout their working years. Whether or not you are a part of “The Great Resignation,” statistically speaking, it’s likely that you have held several other positions so far in your career. As a result, you may have more than one 401(k) account you are tracking or should be tracking.
So, should you leave your retirement account with your previous employer, move it to your new employer, roll it into an IRA or choose another alternative? The answer: it depends.
Some of the many factors to consider include:
- Do I like the simplicity of having all my accumulated retirement savings with my current employer’s retirement plan?
- Will the investment options in my current employer’s plan provide me with the opportunity to invest and diversify my retirement savings in a manner that best suits my goals?
- What’s the transparent and hidden costs of the options I’m considering?
- Do I like my former employer’s retirement plan – specifically the investment options or the web/app functionality – better?
- Do I like the greater availability of investment options in a self-directed rollover IRA?
Evaluating these and similar questions is important. Trusted advisors and financial professionals can help. In fact, updated rules promulgated by the Department of Labor, FINRA and other regulatory bodies help focus the responses on your unique needs.
One opinion I personally hold: I don’t believe leaving a trail of retirement plan accounts at previous employers is a good idea. A previous employer may get acquired or simply go out of business. You might move - locally or out of state - and forget to update your address information. You may simply forget about working for an employer. Additionally, employers may have options to distribute your small account balance to you as taxable (under $1,000) or to an auto-IRA rollover ($1,000 to $5,000) provider they have selected.
Have you left any retirement plan accounts behind?
Sources
1FINRA is the Financial Industry Regulatory Authority Corporation and acts as a self-regulatory organization that regulates member brokerage firms and exchange markets.
HORAN Capital Advisors, LLC is an SEC registered investment advisor. The information herein has been obtained from sources believed to be reliable but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results. Market conditions can vary widely over time and there is always the potential of losing money when investing in securities. HCA and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only and is not intended to provide and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.