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Exploring Options for Your 401(k) When You Change Jobs


Exploring Options for Your 401(k) When You Change Jobs

In today’s world, it is normal for mid-level professionals to jump between a few different jobs early in their career as they try to figure out their passion and path.

When leaving a job, we often take with us the knowledge we gained from our experiences and hopefully some friendships we made as well.

However, there is one thing that often goes unnoticed.

If you had a 401(k) plan at a previous job, you may have forgotten all about it! It’s all too common for this to happen because many people stop receiving statements from these accounts or they just get distracted and forget about them. Unfortunately, there is no easy way to track down these accounts. On top of that, few people realize that you have other options aside from just letting the account be. (For related reading, see: 6 Questions to Ask a Financial Advisor.)

Considering Your Options

There are often conflicts of interest in many 401(k) plans today. A recent study in the Journal of Finance has found that conflicts of interest in 401(k) plans can lead to serious opportunity cost for individual investors. Too many managers are prioritizing the profits of their institution by investing your money in their own funds (among individual financial advisors rather than institutional) even if that is not the best investment option for you. As John Oliver recently detailed, these conflicts of interest can cost millions over the course of a single retirement plan’s life. Dealing with this reality requires awareness on your part. Make sure you look at old 401(k) statements from past employers to help ensure they are being managed properly according to your needs and situation.

What Are Your Options?

If you do determine that your 401(k) plan from a previous employer is not being managed properly, the good news is you have options. As you may be aware, there are many potential benefits of rolling over your 401(k) from your previous job into an IRA. These include lower management and expense fees as well as more investment options. It also allows you to hand pick a financial advisor to help you manage the account who you are comfortable with and who is acting in your best interest at all times. On top of that, it also allows you to consolidate multiple accounts into one retirement account.


Can’t Find Your 401(k) Statement?

If after reading this you are wondering where you can go to track down old 401(k) plans of yours, here are a few suggestions.

  • Contact your old employer’s HR department. They may be able to answer questions for you and even if they can’t, they can hopefully direct you to someone who can.
  • Search on The National Registry of Unclaimed Retirement Benefits to see if you show up.
  • Contact your financial advisor and see if they can help you track it down.
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