Don't Leave Your 401k Behind

Why would anyone leave their 401k behind when they leave their job? Do people trust that someone they don't know, at a job that they don't work at anymore, is going to have their best interest in mind as they manage their future? Do enough people know why they should jump on the chance to take control of what could be the single, largest investment they have ever had? You are only allowed to take control of this money when you leave your job. More often than not, the opportunity to get your money away from a 401k and rolled into an IRA is extremely beneficial.

Don't get me wrong, a 401k at a company can be a great investment vehicle; when you are working there. The company match is such a strong benefit, that it is most often the recommended way to invest for your retirement savings while working. There are other minimal benefits, but none are as advantageous as the "company match" provided as you contribute to your account. The only problem is, once you can't contribute anymore (retirement, termination, or other separation), you lose that powerful benefit. What you are potentially left with is an investment vehicle over which you have restricted control, limited investment options, and future investor relations nightmares.

If it doesn't sound pretty, it's because it's not. We all like to have control over our money; especially when it comes to retirement savings. By leaving it at your old job, you could have to jump through hoops to get full access to the money when you need it. With some companies, this can be a hindrance or a borderline inconvenience. In other cases, as with some small and mid-size companies, this can be a downright painful process which could potentially drag on and on. The bottom line is that if you needed your money, you may be at the mercy of your human resources department.

We also like options and variety. In most cases, 401k plans have very limited amounts of each. The investment options in 401k plans are often a generic mix of funds which are chosen to accommodate the whole employment force, not the individual. You will be hard pressed to find a mix that fits your exact investment style and desire for quality when investing in a 401k.  However, you can find that mix by rolling into an IRA and then hand selecting what investments you would like to work with or which investors you would like to have helping you. With the full array of investments available, you will have the opportunity to create custom portfolios, and find a allocation which is suited to you!

Who likes automated phone systems? How about talking through your retirement accounts with someone you've never met. Well, that's what you could get if you leave your 401k at your old company. Often, the "representative" on your account, has never even looked at your account, nor do they know anything about you. How can they possibly knows what is best for you? Wouldn't it be better to choose who's working with you, rather than pressing "7" to get to investor relations extension?

I remembered that someone asked me once if it made sense to move their money from their old 401k to their new one. Although it may sound good, why pass up on the opportunity to get out of the 401k trap, and to take full control of your retirement nest egg? There is too much freedom to be lost by moving out of your old 401k right into another one. You only get the chance to take control one time. Why pass on it?

Taking your 401k and rolling it into an IRA can allow you the opportunity to take full control of your money and invest it with whomever, whatever or wherever you decide. Don't be bothered with a nagging worry that you left something behind at your old job. Don't let a stranger, at a job you left, manage your future. It's your money! Take control!

If you would like me to review your 401k options, please feel to call me at 630.845.8880 or email me at cbreitenbach [at] weg1 [dot] com.