$2 Trillion in 401(k)s: Are You Ready to Retire?
Here’s a breakdown of the key takeaways from the provided text regarding what to do wiht a 401(k) after leaving a job:
Your Options:
* Roll over to a new employer’s 401(k): A viable option.
* roll over into an IRA: A viable option.
* Cash out the balance: (Not recommended, as the text doesn’t highlight this as a good option)
* Leave it with the old employer: possible, but comes with risks.
Risks of Leaving it with the Old Employer:
* No further contributions: You can’t add to the account.
* Company match stops: If your former employer matched contributions,that stops.
* fees: You may start paying administrative fees that the company previously covered, which can erode your savings over time.
* Lack of Management: Accounts are frequently enough “forgotten” and not actively managed, hindering growth.
* Lost Track: It’s easy to lose track of fees and how your assets are allocated over time.
* Significant Loss: Mismanagement or simply forgetting about the account could lead to losing over $500,000 in potential savings over a career.
Key Point:
While leaving the money with the old employer isn’t inherently bad, it’s vital to be aware of the risks and consider rolling it into an IRA or your new employer’s 401(k) plan.
Resources:
* Retirement Savings Lost and Found Database: A government resource to help find old plans: https://www.investopedia.com/retirement-savings-lost-and-found-database-8769665