In the excitement of landing a new job, you might want to neglect the housekeeping of leaving your old job. Or if like so many Americans, you’ve been out of work for awhile and you’ve just gotten hired on, you might not be thinking about your old 401k account. It’s sitting at your old company, in a 401k rollover account, waiting to see what you want to do with it. It’s not the worst place for it to be. It is still earning money in what ever funds you’d put it in, way back when.
Now that you are moving to a new company, starting a new 401k account, go ahead and do the 401k rollover. What you are doing, when you execute a 401k plan rollover, is putting all your money together to work on growing for your retirement. This is not the proverbial putting your eggs in one basket, instead it is getting your team all facing the same way so that you are pulling the load together. All of your money needs to be working together to grow into the nest egg you need to retire comfortably.
401k rollovers are easy enough to deal with. Your Benefits administrator or Human Resources person can get you the necessary forms. In most cases, it is a one page form to fill out. If you are doing a 401k rollover/IRA you will need to have the IRA set up already. As you would expect, of course. Get the IRA account active with the firm you choose and then, once it is in place, you can prompt the rollover. Even if you plan on keeping your regular 401k, a rollover to an IRA is a great way to fund a secondary account. For some people more diversification is desirable. You can look towards funding a Roth IRA — a post-tax dollar account with your 401k rollover. A 401k rollover/Roth functions just as an IRA rollover does. Get the account set up and then execute the transfer.
You can have several retirement accounts and in fact this sort of tax shelter diversification is ideal. It is good to have a taxable account and a non-taxable account for your retirement. Taxes on the 401k or IRA is something that most people forget when they are budgeting for retirement expenses. Taxes are certainly lower in your golden years, but they are still a fact of life. What matters, in the long run is being mindful of your money. Make sure that you know where all of it is. If you have any lingering accounts at old companies, do the rollovers to get all the money in line and focused on growing for you.