A piece of black paper with "401k rollover" written on it

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There’s a reason the newly passed Secure Act 2.0 aims to set up a government-sponsored database of lost and forgotten retirement accounts by 2025. Millions of people switch jobs every single year, and millions of 401(k) plans and other retirement accounts fall by the wayside as a result.

Capitalize, a financial services and data company, even estimates that as many as 24.3 million 401(k) accounts had been forgotten as of May 2021. The company also notes that those accounts hold as much as $1.35 trillion in assets.

We all know that job hopping is a lot more prevalent now than it used to be as well, so there are 401(k) plans that get left behind when someone moves from one job to another. All of this raises the question: What should you do with old 401(k) accounts, anyway?

We asked experts what most retirement savers should do if they have multiple old retirement accounts scattered around — here’s what they had to say.

Keep track of your old 401(k) accounts

A calculator rests on top of the pages of a 401K retirement account statement.

Before you do anything with your old 401(k) accounts, you’ll need to track them down first.

If you are still getting regular statements for your old 401(k) accounts, that’s good news, as it should have the information you need to move it elsewhere. If you’ve completely lost your 401(k) information, however, you’ll need to do some digging to track some information down.

Charles Schwab recommends reaching out to previous employers to find out where your old 401(k) may be located first. If they don’t reply or no longer exist, you can contact the plan administrator or find out the plan administrator by searching the U.S. Department of Labor website for the company’s Form 5500. You can also search your state’s unclaimed property database.

Roll over your 401(k) accounts early

Person working on a laptop.

Vanguard senior financial advisor Cassandra Rupp points out that changing jobs doesn’t mean you have to leave your retirement assets behind. While you can technically leave the funds where they are in most cases, Rupp adds that you can also roll over your accounts to your new employer’s plan, or into an IRA through a brokerage firm.

“You don’t want to halt the process of saving because how much money you’re able to save is one of the most influential factors in helping you achieve your long-term financial goals,” said Rupp.

While rolling over your old retirement accounts is usually a good plan, Rupp cautions against withdrawing your old retirement assets with the goal of moving the money to a new account yourself. Instead, she says to roll over the assets directly to a financial institution so that no assets pass through your hands. Many brokerages will offer to do this for you when you open an IRA.

“This avoids any concern of paying income taxes on the balance and early withdrawal penalties if you don’t roll over the account within 60 days,” she said.

Financial advisor James Schramm of Schramm Financial Group also points out that consolidating retirement accounts can help you avoid forgetting which ones you have — a huge factor to consider when you may still have decades to go before you reach retirement age.

The advisor also points out that sometimes a previous employer moves the 401(k) to a different provider, which could cause other difficulties. “If your previous employer doesn’t know your current address, it may not be aware that your funds have moved,” he said. “It can be difficult to track down.”

Seek accounts with more investment options and lower costs

A calculator and a pen on top of a piece of paper with number amounts on it.

Schramm also says many employer 401(k) plans charge fees for maintenance and management, and these fees can eat away at your retirement savings over time. Research from Capitalize reveals that savers could miss out on nearly $700,000 in retirement savings money over a lifetime if their forgotten 401(k) accounts are in higher fee plans with poorly allocated investments.

Moving old accounts into one new one can reduce your overall fees and keep more of your money working for you, he said. You can find out this information on fees you’re being charged by taking a look at the annual fee disclosure your provider sends out (if they do), or inquiring with the old 401(k) plan administrator about the fees they charge.

Schramm also says that some older 401(k) accounts may have limited investment options, which can hinder your ability to diversify your portfolio and maximize your returns.

“By consolidating your accounts, you can potentially gain access to a wider range of investment options and create a more customized investment strategy that suits your needs,” he said.

Tailor your investment plan to your goals

Multiple piggy banks arranged in stacks forming a bar graph on a blue background

Fee-only financial advisor Alissa Krasner Maizes adds that rolling over old 401(k)s and ultimately consolidating your investment assets at one firm simplifies your finances, empowering you to have a better picture of your financial journey and increasing the likelihood of having greater financial confidence and involvement with your finances.

In fact, it can be difficult to know “where you’re at” in your retirement journey when you have multiple old accounts and you don’t know their balances or how they have performed so far. And if you don’t take the time to track each account independently, you may never have a full picture of your financial health or how much you need to save to retire when and how you want.

Of course, Maize also agrees there are myriad of benefits that come with moving your 401(k) plan to a brokerage firm that offers more investment choices, lower expenses, potentially no added fees and low-cost ETFs and mutual funds. Since your 401(k) is in a qualified retirement account, you can roll it over directly into a brokerage firm IRA and invest in a diversified portfolio of low-cost mutual funds and ETFs without incurring taxes.

Avoid RMD hassles and administrative issues

A piece of paper with Required Minimum Distributions RMD on it

Financial advisor Jaime Eckels of Plante Moran Financial Advisors also points out that, on an administrative level, having multiple 401(k) accounts can be a hassle for you and potentially your beneficiaries. For example, forgetting about old 401(k)s could mean your family would have to try to figure out where your old accounts are if you pass away. If you don’t write the information down, how will they find it?

Having multiple old employer plans can also be a nightmare if you continue living well into retirement age. Eckels points out that, when you reach the RMD (required minimum distribution) age of 73, you’ll have to ensure that you’ve taken all the necessary distributions out of all your accounts or plan on paying a penalty to the IRS for missed distributions.

“Also, think about making changes to your beneficiaries and what a time-consuming process it is to make updates to multiple accounts or the risk of not making the necessary updates to all of them,” said Eckels.

The advisor said that one of her newer clients had six old employer retirement plans and only five of the plans had his new wife listed as the beneficiary.

“He’d forgotten to update one of the accounts, and his ex-wife was still named,” she said.

How to roll over an old 401(k) plan

A person holding a tablet and writing on a piece of paper.

Many major brokerage firms make it easy to roll over old retirement plans yourself, in which case you can select your own investment options among stocks, bonds, target date funds, index funds, mutual funds, ETFs and more. As an example, both Vanguard and Fidelity make rolling over your account to an IRA a breeze, and they both offer specific steps and resources you can access.

Financial planner Aviva Pinto of Wealthspire says that rolling your 401k into a rollover IRA and going to a large custodian (Vanguard, Fidelity, Schwab, etc.) gives you the option of using any of their ETFs and funds, which is a major advantage.

“There will be thousands to choose from rather than the handful currently available to the 401k plan,” she said.

If you know you need to improve your finances but you’re feeling overwhelmed by the research involved in rolling over old retirement accounts, however, you can also pay for help. Working with a financial planner can facilitate your rollover and everything else you need to do to get on track for retirement. A qualified financial advisor can help take care of the administrative part of rolling over your old accounts, and they can also help you select an investment allocation that can get you where you want to be by retirement age — or at least give you the best possible chance.

A financial planner can also invest your money in accordance with your risk tolerance and retirement goals, which is something you may need help figuring out anyway.

Bottom line

Rolling over your old 401(k) accounts to an IRA can bring a variety of benefits. For one, you’ll have all of your retirement savings in one place. This makes it easier to take required minimum distributions and track your retirement investments. Plus, if you move your 401(k) accounts to an IRA, you may have a larger selection of investments to pick from and you could benefit from lower fees.

And as discussed, rolling over old 401(k) accounts isn’t an incredibly time-consuming process. You can set up one IRA with a brokerage of your choice and move all of your existing retirement accounts over. Oftentimes this is all handled by the receiving brokerage.

Looking for a new savings account? Read our guide to the best high-yield savings accounts.

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