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What to Do with that Old 401(k) You Left Behind

By Stuart Robertson

Many of us have switched jobs and employers in our lives. In fact, according to the Bureau of Labor Statistics, we will change jobs 12 times in our lifetimes! And it’s pretty common that we’ve left that 401(k) account from that previous employer or two behind. When you’re busy starting a new job, taking the time to move your 401(k) can sit on the back burner. But what ought you do with those "old" 401(k)s?

Leaving old 401(k)s where they are is likely the wrong call for a lot of reasons. In general, moving it to your current company’s 401(k) plan can offer you many benefits such as:

  1. One Account Is Easier to Track and Simplifies Managing Your Investments
    When you have multiple retirement accounts, you have several logins to remember and phone numbers to call if you need help, and all of your important info is in various places. By consolidating your accounts into just one 401(k), you’ll see your retirement savings in one place, and it makes managing your asset allocation easier than ever, as opposed to trying to do it across multiple providers and accounts (not fun).
  2. Access to Your Money Via a 401(k) Loan
    While you should look at this only as an emergency option, many companies allow loans in their 401(k) plan. If yours does, you can receive a loan for half your vested balance up to the $50K limit and then pay yourself back into your 401(k). You won’t be able to do this from your former employer’s 401(k) plan, only your current one. There are some pitfalls to avoid if you consider taking a loan, so learn more about how they work before you do.
  3. Your 401(k) Money Is Protected from Creditors and Bankruptcy
    The money you have in your 401(k)s has protections against creditors including in bankruptcy, as well as against claims from creditors.
  4. Option to Put Off Your Distributions Longer Retirement accounts require minimum distributions to begin at age 72. However, if you’re still working, you can postpone distributions from your current 401(k) until you retire which can be well past the age of 72.

It may take a few phone calls and a few forms, but managing your money well can really make a difference and worth the effort. To consider other pros and cons of what to do, check out our more in-depth blog on this subject. Happy saving.


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