Should I leave my 401(k) with my old employer, roll it over to a plan my new employer offers, or do something else entirely?
I'm 52 years old and have $50,000 in a 401(k) from my old employer. I now work for an employer that provides a pension, to which 6% of my salary goes, but they also offer a 403(b) and a 457 plan. My current employer makes no contributions to any plan, and I can't contribute to my old 401(k) while it stays with my old employer. Should I leave my 401(k) where it is, roll it over to a plan my new employer offers, or do something else entirely?
You have three choices for the funds in your old 401(k) plan. The two you mentioned (leaving it where it is or rolling it over to your new employer) and third, rolling it over to an IRA. The best option for you would depend on several different factors. The following considerations related to the two main factors may help you in making your decision.
The main advantage of rolling the funds into an IRA is you will have more control over the investments and the costs of the account. Typical 403(b) and 457 plans are notorious for having high costs and often have very limited investment choices (including potentially only annuities). Many 401(k) plans are also similarly structured with limited investment choices, high cost funds, and high account fees. Check to see the investment choices and costs of your old 401(k) plan and your current employer's plans. If they are high or you have poor investment choices, consider rolling the funds into an IRA where you can have more investment choices and lower fees.
The main advantage of leaving the money in your 401(k) or another ERISA-qualified plan is that they are protected from creditors. If you are exposed to significant liability or have a high chance of being subject to a lawsuit, leaving the money in the 401(k) might be a better idea.
There are many other factors to consider, including long-term tax planning between Roth and traditional account options and Required Minimum Distribution rules. But start with the two factors above to help with the immediate decision and you can make adjustments as time goes on.