What should you do with a 401(k) or 403(b) if you leave your company? You have many options, but most of the time, there is only one that is right for you. Let's review some of your options.
The first option that many people take is to do nothing. If you leave your retirement plan at your old company you may continue to invest in the stocks and funds you had before you left. There are a few problems with this option.
The first is that you are limited to invest only in what your former company makes available, and the options may not be that great. The second problem lies with fees. When you work for a company, they most likely pay the administrative fees of the retirement plan. Once you leave, they have no interest in paying those fees for you, and I certainly can't blame them for that.
Currently the laws are changing to make retirement fund fees more obvious on your statements. If your old retirement plan is still with your former employer, you may be paying these fees yourself and not even know it. Over time, these fees can really cut into your returns.
Another option you have is to bring the plan with you to your new employer. While this is usually a better option, you are still limited to investing in what your new employer makes available.
We almost always suggest that our clients do a 'Direct Transfer Rollover' of their retirement funds into an IRA. With this option you still may have some fees depending on the amount you have invested, but they will be considerably lower. You also are not limited to 8 mutual funds which most 401(k) accounts offer, but you can invest in over 8,000 mutual funds through the open market.
If you are unsure of how to go about transferring your funds into an IRA, we would love to help you, as well as teach you about investing.
Justin & Rachel Lukasavige are Personal and Health Coaches at Lukas Coaching. Visit www.lukascoaching.com/resources.htmhttp://www.lukascoaching.com/resources.htm">www.lukascoaching.com/resources.htm for a ton of free tools to help you improve your health, finances, business, career & life!
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Published 01-11-2007
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