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July 2, 2020 • 5 minutes
When you move from one place of employment to another, you’ll probably want to at least give some careful thought to taking the funds in your old 401(k) plan with you. In many cases, rolling them over into an IRA is the best choice.
But then again, sometimes it’s better to leave your funds in the 401(k) even if you no longer work there. But how do you know which option is the best choice? What’s the process if you decide to follow through? It’s probably simpler than you think.
Your old employer-sponsored plan has the best interest of company employees at heart. When you leave the company, you no longer fit that criterion. So there’s no reason to expect that your desires will ever again play a role in the plan administrator’s decisions.
When you take your money with you, you regain control over your money, says certified financial planner, Jim Blankenship for U.S. News & World Report. You choose which is the right IRA, and this creates more choices than leaving money back at the old plan.
Blankenship adds, “Employer plans only have a limited list of mutual funds to choose from. In an IRA, you can invest in just about any fund, stock, bond, or an ETF you would like to.”
The grass isn’t always greener just because it’s new. Sometimes the best choice is to keep your money right where it is. If your old plan has great investment options, you may lose them if you move to an IRA.
Maybe a bigger reason to stay with your old plan is no-fee access to your money sooner than if you transfer it. Once you roll your 401(k) into an IRA, you lose that ability to withdraw the funds penalty-free (not tax-free of course) at age 55.” Just remember that you’ll pay taxes upon withdrawal.
If you decide that an IRA is the right choice for you, it’s not really a difficult process to make the move. Just be sure to have the IRA in place before you initiate the transfer. If not, the 401(k) plan administrator will hold back about 20 percent for taxes as if you’re withdrawing all of your money and not reinvesting it.
Let the administrator know that you’re making a “direct rollover,” advises Blankenship. You might receive the check, or the new custodian might. Either way, the funds in your 401(k) will be directed to the new custodian. If the check comes to you, you have 60 days to make the deposit.
There’s no single right or wrong way to handle an orphan 401(k) plan. It’s as individual a decision as any other financial decision that you’ll make. If your current plan is great, you like the administrator, and you are pleased with the performance of your investment, it may make sense to leave your funds where they are. But if you want to start fresh with a new plan and new choices, rolling over into an IRA puts you back into a position of control.
Planning for the future is sometimes confusing because many people aren’t financial experts. But that doesn’t mean you’re stranded with few or no options. Boldin is there to help, whether it’s finding an advisor, determining how much you’ll need to retire, or choosing the right investments for your money.
Check out the Boldin retirement calculator to learn more about your current financial fitness and get some advice on ways that you can improve. It only takes a few minutes and doesn’t cost a penny, but what you learn could be invaluable.
Rolling over your 401(k) into an IRA isn’t just a transfer—it’s an opportunity to regain control over your retirement savings, align your investments with your goals, and layer in strategic flexibility. When your old employer plan limits your options or convenience, moving to an IRA can give you broader investment choices and deeper integration with the Boldin Savings Playbook.
Start by modeling the rollover impact in the Boldin Planner. You’ll see how this move can affect your future withdrawal strategies, tax planning, and savings trajectory. The goal isn’t merely making the switch—it’s ensuring every financial decision tilts you toward long-term clarity, confidence, and compounding growth.
If your old plan offers limited investments or inconvenient access, a rollover delivers more control. The Savings Playbook tells us to use a rollover as a chance to optimize your retirement sequence once your emergency fund and employer matching contributions are secure.
Ask for a direct rollover, where funds move directly to your IRA custodian. This prevents the 20% mandatory withholding. Using the Boldin Retirement Planner, you can test how different rollover methods influence your net savings and planning peace of mind.
Yes. Some employer plans offer penalty-free access at age 55, which IRAs do not. If early access matters, keep that in your decision framework. The Boldin Planner helps you weigh early-access needs alongside flexibility and investment variety.
Choose an IRA provider that offers low-cost investments and aligns with your risk preferences. Then use the Planner to project how that flexibility helps you compound returns over decades—your rollover can be both a tactical and strategic upgrade.
Rollover IRAs give you flexibility to convert later to Roth IRAs or transfer to beneficiaries. These moves involve tax planning and timing choices. Modeling them in the Boldin Planner helps you balance taxes, growth, and legacy planning—your rollover becomes the first step toward financial clarity.
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If you’re leaving one job and moving to another, or if you’ve lost or quit a job, there’s a decision to make. Should you keep your money in your ex-employer’s retirement plan, or should you move it? The answer lies in whether the old plan is performing well, or whether you’d be better off cutting […]
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