In today’s workforce, job changes are more common than ever. Whether you’re making a career move, experiencing a layoff, or transitioning into a new industry, there’s one important piece of your financial life that often gets left behind: your old 401(k).
While it might seem like just another task on your checklist, neglecting an old 401(k) can have long-term consequences. Here’s what you should know – and what steps you can take to keep your retirement savings on track.
What Happens to Your 401(k) When You Leave a Job?
When you leave an employer, your 401(k) plan stays with your former company’s retirement plan provider unless you choose to move it. Over time, it’s easy to lose track of these accounts, especially if you’ve changed jobs multiple times.
Why This Matters: Hidden Costs and Missed Opportunities
Leaving your 401(k) behind may seem harmless, but there are risks and limitations that often go unnoticed:
Fees and Expenses: Old plans often include administrative fees, investment management costs, and fund-level expenses that reduce your returns.
Limited Investment Options: You may be stuck with a narrow selection of investments, which can limit diversification.
Reduced Access and Oversight: Without contact with your former employer or plan provider, it’s harder to monitor or adjust your account.
Lack of Strategy Coordination: Scattered accounts make it difficult to manage your retirement savings as part of a unified financial plan.
What You Can Do With an Old 401(k): If you have one or more 401(k) accounts left behind, you have options to regain control:
- Roll It Into Your New Employer’s Plan: If your new plan accepts rollovers, consolidating accounts can simplify your retirement planning.
- Roll It Into an IRA: This option usually offers broader investment choices and greater control.
- Leave It Where It Is: You can often keep your account with the former plan provider, but be mindful of fees and reduced flexibility.
- Cash Out (Not Recommended): Early withdrawals often trigger taxes and penalties and significantly reduce your long-term savings potential.
New Tools to Help You Take Control
Thanks to evolving plan features and technology, managing your retirement assets is more flexible than ever.
Self-Directed Brokerage Account (SDBA)
Some employer-sponsored plans now offer an SDBA, which gives you access to a wider range of investment options than the standard plan menu. This added flexibility can be helpful for those who want to work with an advisor or take a more active role in managing their investments.
Pontera: In-Plan Professional Management
Pontera is a secure platform that allows financial advisors to actively manage your 401(k) or 403(b) account while it stays in the plan. This technology enables personalized oversight, strategic rebalancing, and coordination with your broader financial plan—all without requiring a rollover.
Your 401(k) Is One of Your Biggest Financial Assets
For most people, their 401(k) is second only to their home in terms of lifetime financial value. That’s why it’s essential to give it the attention it deserves.
Whether you’re tracking down forgotten accounts, consolidating assets, or looking for in-plan professional management, we can help you take the next step.
Have questions about an old 401(k)?
Let’s connect. Together, we can review your options and make sure your retirement savings stay aligned with your goals.
About the Author
Reid Ruark is a client manager with Income & Estate Planning Partners, where he helps individuals and families create personalized financial strategies with a focus on cash flow, retirement, and long-term planning. He is passionate about building trust-driven relationships that support clients through every stage of life.
About Income & Estate Planning Partners
At Income and Estate Planning Partners, we help individuals and families take control of their financial futures through thoughtful, customized strategies. Our team specializes in income planning for retirement, tax-efficient investment solutions, and estate planning designed to protect your legacy. With a planning-first approach, we work to simplify complex financial decisions so you can feel confident about the road ahead. Whether you’re preparing for retirement, navigating major life changes, or planning for future generations, we’re here to walk alongside you every step of the way.
Disclosure
The information provided in this article is based on sources believed to be reliable; however, accuracy and completeness cannot be guaranteed. This content is for general informational purposes only and is not intended to provide specific legal, tax, or investment advice. Please consult with a qualified legal or tax advisor regarding your individual circumstances. Nothing in this material should be interpreted as a recommendation or solicitation to buy or sell any security.