Wait on a rollover IRA
Question: I am a recently divorced, single mom who is currently not employed. Having never dealt with financial matters myself, I have been on a steep learning curve this year! Marketplace Money has been one piece in my crash-course education, so thank you! 🙂
Although I am trying to start building up other savings, right now most of my assets (apart from my home) are in two 401(k)s — one from my previous employer and one I received as part of the divorce settlement QDRO. From what I have read, it sounds like I should roll these over and consolidate them into an IRA? I am having trouble figuring out how and where to do this.
My old retirement account was through a university (TIAA-CREF) and is in unique funds that will not be available to me if I move the money away from that account. I have no idea how to evaluate the current funds or how to weigh the pros and cons of leaving it where it is or moving it elsewhere and trying to manage the investment allocation myself. As a complete novice, I’m a little worried about changing anything and suffering regret later. What am I losing by leaving the money in these two 401(k)s? Thank you! Ginger, Park Ridge, IL
Answer: I wouldn’t be in a rush. You have a lot going on. I don’t see any real penalty for waiting on a rollover IRA. Yes, I’ve written many times in previous posts why I think it’s usually a good idea to roll over a previous employer-sponsored retirement savings plan into an IRA. (You can read one of those posts here.)
That said, there’s no real risk of leaving your retirement savings plans with the former employers. I’m assuming the former employers are OK with it. Most managements take the oversight of the employee pensions seriously, and there are legal and regulatory rules to follow. TIAA-CREF is a reputable fund manager. I would make sure you designate a beneficiary with these retirement savings plans.
When you’re more comfortable going through your retirement plans, I would take a close look at the investment options and see how you feel about them. You can always talk to one of the professional advisors at TIAA-CREF for some additional information, too. And I imagine the other plan also has professionals you can talk to. The conversations would be part of your information gathering.
I’d also recommend a couple of books. You don’t need all of them, but one might be useful. A new book is Risk Less and Prosper: Your Guide to Safer Investing by Zvi Bodie and Rachelle Taqqu. I’m a fan of syndicated columnist Mark Miller’s book, The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work, and Living, and Jane Bryant Quinn’s Smart and Simple Financial Strategies for Busy People. My book is The New Frugality: How to Consume Less, Save More and Live Better.
In the meantime, keep all the forms and information about the accounts so you stay on top of it that way.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.
You make our
Support nonprofit news you love with a gift today.