Thinking of consolidating old 401(k) plans?

Generally speaking, it often makes sense to consolidate old 401(k) and 403(b) plans into one place. Let’s review some of the advantages and other considerations.

Advantages:

Simplicity. Having all of your money in one place is easier to manage, as you have to pay attention to only one account.

Fees. One account is almost always less expensive than multiple accounts.

Investment freedom. If your money is with an old employer’s plan, you are limited to the investments available in that plan. If you invest in an IRA, you have more choice.

Safekeeping. It’s not uncommon for people to lose track of their old plans.

Other considerations:

Low fees. If your previous employer has a great plan with low fees, it might make sense to leave your savings in their plan, especially if you are nearing retirement.

Tax reasons. In rare cases, there could be good tax reasons to leave your money behind.

Examine your personal circumstances and decide what is right for you. Consult a tax advisor for tax questions.

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