Do you have 401(k) plan accounts with former employers that you haven’t thought about for years? Many people do, especially if they’ve worked for multiple companies.
Evaluate Your Accounts
Keeping track of your retirement accounts is always important. It can become critical when you start planning for income. That’s when you want to identify every dollar of savings available to generate future returns. If you’re a pre-retiree and haven’t received 401(k) plan statements recently, call or email your former employers’ human resources departments. Ask them to send you information on the plan and your account. Also, make sure they have your current phone number and address.
With this information in hand, you can determine whether the investment choices you made are still appropriate for your needs and complement your other investments. If they aren’t, evaluate the plan menu to make sure it includes more suitable alternatives. Be sure to analyze the account’s investment performance and fees to make sure they’re helping you reach your retirement goals.
Keep the Money Invested or Roll It Over
Depending on your findings, you may decide to keep your money invested in the plan or roll it over. With a rollover, your account balance can be directly transferred to your current employer’s 401(k) plan (if it accepts rollovers) or an IRA.
Many Johnson Brunetti clients choose an IRA rollover because it offers them more investment opportunities and lower fees.*
The last alternative for dealing with those old 401(k) accounts is to withdraw the money. Most advisors, including me, will tell you that it’s not financially prudent to treat older 401(k)s like unexpected windfalls and opportunities for guilt-free spending. If you run the numbers, it’s surprising to see the negative long-term effects that even small withdrawals can have on your future income and retirement security.
As you consider what to do, there’s one last thing to keep in mind: Your former 401(k) accounts belong to you, not your former employer. You have every right to get the facts and take the action you feel is best.
If you still have questions regarding what to do with an old 401(k) account, we can help you answer them. Request your free phone call with one of our financial advisors today.