Moving retirement savings
Question: I have recently lost my job which offered a 401K plan. While my new employer does offer a form of retirement plan it is not a 401K. What would be the best way of rolling over the existing 401k, about $99,000? What should I watch for when it comes to fees? Would there be a benefit of staying with my current investor, T Rowe Price? Thank you for you help, Ursula, Myers, PA
Answer: I usually like the option of moving the retirement savings into a rollover IRA. Many employers will let former workers keep their money in their retirement plan. And that's fine if you like your former employer's 401(k) choices. Still, my bias is for you to take control of the money with a rollover IRA.
It's your money and if it's under your control you'll watch it carefully. Plus, you get to chose the investment company and investment options, not your former employer.
However, if you can keep the money with your former employer that gives you time to research your choices. You want to do business with a financial institution with choices you like, low fees, good service and an easy to navigate website. T. Rowe Price is a well-known company. You could go to the financial market and mutual fund database Morningstar.com to look into other options.
There are no tax consequences or penalty imposed so long as the money is transferred from your former employer's plan directly into the rollover IRA account. I would check both with human resources folks in your former company and with the financial institution that will accept the money before doing anything. It's always helpful to have a human being walk you through the process.