What are the upsides of rolling over a Roth 401(k) to a Roth IRA?

Question

Some employer's retirement allows to roll-over Roth 401(k) to a Roth IRA, otherwise this can be done when leaving one's job.

Roth IRA has at least 3 upsides compared to Roth 401(k):

1. There are no required distributions with a Roth IRA, whereas distributions must start at age 72 with a Roth 401(k).
2. One can withdraw Roth IRA contributions anytime, unlike Roth 401(k). With a Roth 401(k), tax- and penalty-free withdrawals before age 59½ generally are limited to loans and specific exceptions.
3. More investment options, unless the Roth 401(k) offers a Self-Directed Brokerage Option (SDBO).

What are the other upsides of rolling over a Roth 401(k) to a Roth IRA?

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Notes:

• I am not asking whether to contribute to either Roth 401(k) or Roth IRA.
• After converting after-tax 401(k) into Roth IRA, can the 401(k) contributions be withdrawn from the IRA without penalties?

Answer 1

Two other important advantages of doing this:

1. Lower Fees. 401(k) plans tend may have administration fees in addition to any expense ratios for the investment choices offered by the plan. Many Roth IRA providers do not charge administration fees for a Roth IRA, and, in addition to a wider choice of investment options, you may be able to find options with lower expense ratios (*).
2. Convenience. If you already have a Roth IRA, rolling your 401(k) into it will mean you have one account to manage instead of two. This also means you don't have to keep track of and in touch with the company your 401(k) was administered by.

(*) While some 401(k)s can offer investment options with quite high expense ratios, some can offer institutional class investment options with lower expense ratios than those available to retail investors so it's not a guarantee that investment options available through a Roth IRA provider will have lower expense ratios.