#Transfer401K #ConsolidateRetirementAccounts #401KBalance
Should I Transfer my 401K Balance to my Current Employer?
If you’re like many individuals, you may have a 401K account from a previous employer that you’ve been maintaining for years. While it may seem like a hassle to transfer your balance to your current employer’s platform, there are several benefits to consider.
1. Consolidating Retirement Accounts
By transferring your 401K balance to your current employer, you can consolidate all your retirement savings into one account. This can make it easier to keep track of your investments and manage your finances more effectively.
2. Avoiding Maintenance Fees
Many 401K accounts charge maintenance fees, which can eat into your savings over time. By moving your balance to your current employer’s platform, you may be able to avoid these fees and maximize your returns.
3. Access to Better Investment Options
Some employers offer a wider range of investment options compared to others. By transferring your 401K balance to your current employer, you may have access to better funds or ETFs that can help grow your retirement savings more efficiently.
Target Funds vs. Other ETFs
Target funds are investment funds that automatically adjust their asset allocation over time based on your target retirement date. While they offer a hands-off approach to investing, they may have higher fees compared to other ETFs.
On the other hand, ETFs (Exchange-Traded Funds) are funds that track a specific index or sector and have lower fees. They may require more involvement in managing your investments, but they can offer better returns in the long run.
Ultimately, the decision to transfer your 401K balance to your current employer and choose between target funds and other ETFs depends on your individual financial goals and risk tolerance.
If you’re unsure about the best course of action, consider speaking with a financial advisor who can provide personalized advice based on your unique financial situation.
Thank you for reading! We hope this article has provided some insights to help you make an informed decision about your retirement savings.
i’d roll it into a regular IRA rather than move it to your new employer’s fund. this will give you greater control and a better selection of investment vehicles that potentially have lower fees. schwab, fidelity, and vanguard are all fine.
imo the only reason to put money into your new employer’s investment account is to get the match — that is, put in your current salary, but not roll over your old stuff.
Options:
1. Rolling it over into your current 401(k):
-Simple option to consolidate assets and not have to keep track of your old info, login, etc.
-Since the funds remain in an employer sponsored plan, you maintain ERISA protection (loan capability and funds are separate from bankruptcy/credit claims).
2. Roll into IRA:
-More investment options than 401(k).
-No ERISA protection.
-Possibly more expensive than a 401(k) (but not always).
The devil is in the details. Look at the fees you are paying on your old 401k vs the new one. I’ve had cases where the old plan was cheaper in fees than the new one. If your 401k is pre-tax, and you are considering rolling into an IRA, then you need to consider the implications if you want to do backdoor Roth IRA in the future (pro-rata rules). As someone mentioned, the IRA also doesn’t have protection from creditors/bankruptcy.