There are a lot of options to consider when you have decided to roll your 401(k) out of a former employer sponsored plan. If you think that’s what you want to do, I want you to consider these 3 items before signing all that paperwork.
1. Fees
Your 401(k) plan has fees and if you’re rolling your investments to an IRA it has fees too. Make sure you know how much you were paying in your 401(k) and make sure you know how much you’ll be paying in your IRA. Watch out for “hidden” fees that are very easy to miss. Will there be a fee every time an investment is bought or sold? Will there be a fee for statements? Are there maintenance fees? Is there a platform fee? Many times employer-sponsored retirement plans are much cheaper than IRAs.
2. Investment Options
Some 401(k)s offer a vast selection of investments. Many offer just a few choices. Some IRA providers offer a vast selection of investments. Some are only able to offer a limited selection. If you’re rolling a 401(k) to an IRA, make sure you know what the investment choices are. If they’re the same (or worse) then it makes very little sense to move unless there’s another convincing reason.
3. Advice / Support
There can be a huge difference between the level of help you get between retirement plan sponsors and IRA providers. Make sure you’ve made an effort to get help from your retirement plan. Often times advisors are on call and there to help for no additional fee. If you’ve decided to take your 401(k) to another advisor in the form of an IRA rollover then it’s important to know you’ll get great advice and support from them as well. This support should be worth whatever extra fee you have to pay when compared to your plan.
There are many other things to consider when you’ve decided to roll over a 401k. I always recommend seeking help from a fiduciary advisor that will give advice that’s in your best interest before making a move.