Will It Be Helpful?
- Transfer to an IRA account at a good firm. See our review of the best firms.
- Transfer to the retirement plan of your current employer. If the plan has low fees or it meets other criteria explained below, this may be worth considering.
- A 401(k) or 403(b) account with your current employer.
- An IRA account that aggregates all the 401(k) or 403(b) funds from previous employers. It might also include some direct contributions that you make.
What Fees Are You Paying?
Are There Exit Costs?
- Surrender charges on an annuity. If you have an annuity in your 401(k) or 403(b) plan, it may charge an extra fee for terminating the annuity contract. Read the prospectus, or talk to your vendor, or try the 403bCompare site for your vendor's fees. Normally, the only way to eliminate these charges is to wait longer.
- Back-end loads on a mutual fund. This type of fee is charged when you sell a fund. The fund is normally listed as "Class B" if it carries a back-end load. Verify the fee with your vendor's representative, because these fees are sometimes waived. If a back-end load applies, you cannot escape the payment. You will have to pay now, during a rollover, or later, when you retire. It may be less now than in the future, so a back-end load is actually a reason to rollover, not a deterrent.
- Frequent trading fees. If you purchased a fund within the previous 30 to 90 days, your vendor may charge a fee (maybe 2%) when you sell the fund. Check the fund prospectus or ask your vendor's representative. If fees apply, you will have to wait a few weeks until they are no longer charged.
Will You Work Past Age 70?
- If you plan to work past age 70 and your employer won't require withdrawals, you may want to consider transferring 401(k) or 403(b) accounts from previous employers into the one for your current employer.
- If you will be working past age 70 and your current tax rate is low, you may want to consider transferring some or all of your old 401(k) or 403(b) accounts to a Roth IRA. Be careful. You will have to pay some taxes on the amount transferred, so check with your tax adviser before doing this.