Do you have an old 401(k) at a previous employer?
There is no one size fits all answer for what to do with it. Your first step is to know your current plan's investment options and how much they are costing you. You should have a variety of fund options not just in quantity but also in style and risk level. If you are only offered one fund choice for large cap stock for example, that would be considered a limited option. Plans must be sure they are giving participants a variety of choices so that you can build a portfolio best for you in the long term.
To review costs, you can ask your employer for a copy of the fee disclosure they are required to have for the plan. This will list any mutual fund fees you are paying in the form of an expense ratio and also any fees the participant is responsible for.
After you have determined all the costs associated with your old 401(k) and if you may be limited to investment options you can begin to compare them to other options.
There is a lot of information online but it is often clear as mud. To be sure you understand and know any hidden fees it is a good idea to talk with us. We can explain how a Rollover IRA (Individual Retirement Account) might be appropriate for you or if you have a new employer we can help you review that plan offering as well. An IRA may be able to offer more investment choices with the same or lower costs as your old plan. We can also offer professional management with asset allocation and investment selection advice.
There are two IRA options to consider, a regular Rollover IRA and a Roth IRA conversion from a traditional 401(k) Plan. A rollover from a Roth 401(k) Plan would rollover into a Roth IRA. There are different tax implications with each option, so we recommend getting the details of those from a professional.
Conclude step 2 by deciding if you are going to keep your old 401k, roll it to an IRA, or move it to your new employer plan.
Now, it's time to gather the forms you'll need.
If you decide to keep your 401(k) at your old employer you'll need to contact them to be sure that you meet any account size minimums they have. Some plans will only allow old employee accounts to stay if they have a minimum account value.
If you have decided to move your 401(k) you will need to contact your previous employer to get the form you need to request a transfer or a rollover. Also, be aware of any outstanding loans on your account. Those will need to be paid before a rollover otherwise they are treated as an early distribution with tax penalties.
Next, contact your new account provider, either Cox Global or your new employer plan contact, to complete any paperwork to open your new account. Please ask questions. Go slow and be sure you understand the selections you are making on your forms and any fees you are agreeing to.
We are here to help you navigate your job transition. Please call us if you have any questions or would like to review your situation, 281-395-8300.
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