As life gets busy, it’s not uncommon to lose track of old financial accounts, especially if you’ve switched jobs multiple times. When someone leaves an employer, that old 401(k) will stay where it is unless you do something with it and it’s easy to forget about. But did you know that rediscovering this “found money” could significantly impact your financial future? In the latest episode of the Money Wisdom podcast, Jake Doser, CFP®, CPWA® and Nicholas J. Colantuono, CFP® share guidance to anyone who has ever stumbled upon an old 401(k).

This topic came from a question we received from someone who was informed their old 401(k) plan is moving to a new platform, but they had forgotten all about it. If you find yourself in this situation and come across an old account, what should you do, if anything?

Let’s start with why you want to take control of such accounts by rolling them over into an Individual Retirement Account (IRA). This move not only consolidates your retirement savings but also provides you with greater control and flexibility over your investments.

One of the key advantages of an IRA, as highlighted in the podcast, is the ability to diversify your investment portfolio. Unlike 401(k)s, which often have limited investment options, IRAs offer a broader range of choices, allowing you to tailor your investments to your specific financial goals and risk tolerance. There are also potential pitfalls of leaving money with a former employer, such as the risk of being forced to take a taxable withdrawal if your 401(k) balance falls below a certain threshold.

But let’s not just focus on the benefits of rolling over a 401(k). Nick and Jake also explore scenarios where it might make sense to keep your money in a 401(k), such as when your old employer offers high-yield fixed interest accounts or if you’re planning to work past the age of 73, allowing you to defer required minimum distributions.

For those looking for more in-depth guidance on managing their 401(k), we offer a valuable resource: “The Ultimate 401(k) Guide.” This guide provides a comprehensive overview of the pros and cons of different retirement account options, helping you make informed decisions about your financial future.

Here’s what we discuss in this episode:

0:00 – Intro

1:56 – Forgotten 401(k)

6:08 – The Ultimate 401(k) Guide

7:07 – Why you might not want to move the money