The Mistake Investors Make When Rolling Over a 401 K Plan

The Key Question To Answer When Picking A Financial AdvisorThe Mistake Investors Make When Rolling Over a 401 K plan

By Bob Brooks, Host of the Prudent Money Radio Show

If you get laid off or leave a company, what is the first thing you do? You clean out your desk and box up all of your personal belongings. What about that retirement account? There is nothing more personal and valuable than that 401 K plan. It needs to go with you too!

You need to be aware of something. There is a common mistake that many investors make when moving 401 K money. You want to avoid the parallel move. A parallel move occurs when you exchange one retirement plan for another, pay fees and commissions, and not gain an advantage for making the move.

There has to be a compelling reason to make the move. Make sure that you are receiving value and gaining an advantage for the money you are paying in fees. You have to ask yourself an important question. What advantage are you getting for moving that 401 K plan?

You Don’t Want to Miss the Opportunity!

Once you are free to move a 401 K plan with a past employer you have a real opportunity.  First, you have the opportunity to move what probably represents the bulk of your retirement dollars to a new plan where you have many more available options.  Most 401 K plans are limited in options. Second, you have the opportunity to consolidate that 401 k plan with your other retirement options creating one big retirement strategy.

Does it ever make sense to keep it in an old 401 K plan?

What I have written thus far references moving a 401 K plan to an advisor directed plan. What if you are comfortable managing it yourself?  Having said that, I would still move it to a self-directed retirement account and increase your investment options.

If you have an abandoned 401 K plan and need some help, make a decision to email me and take some action because the last thing you want is your retirement account out of sight and out of mind.

Bob Brooks is a registered investment advisor and host of the Prudent Money Radio Show. Bob specializes in retirement planning and investment and managing retirement accounts.

  • George McCormick

    Thanks! Perfect timing for me. I was just laid off and was thinking about what to do with my 401k plan. Amazing how God answers our questions at the right time.

    • Bob Brooks

      George . send me an email at bob@prudentmoney.com if you want to have a conversation about your 401 K plan. Sorry you were laid off!

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