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Started new job. Rollover previous employer 401k to new 401k, IRA or Roth IRA?

I have a 401(k) account with my last company. I contributed 6% and company matched up to 6%. Now that I have left the company I wanted to know what I can do with this 401(k) account.

  1. Convert to individual IRA or Roth IRA account
  2. Continue contributing individually
  3. Cash Out (NO WAY!!)

I am leaning towards Option 2 since the account has given me good return 18.21% in 3 years.


  • Are you talking about 401k maybe?
    – littleadv
    Jul 16, 2012 at 18:02
  • yes I am talking about 401K
    – azamsharp
    Jul 16, 2012 at 18:03
  • Then I suggest looking at this question: money.stackexchange.com/questions/842/…
    – littleadv
    Jul 16, 2012 at 18:06
  • 1
    Usually you're not allowed to contribute to the employers' plans individually. But you can transfer your investments to a IRA account without changing them, and continue getting the same returns.
    – littleadv
    Jul 16, 2012 at 18:07
  • 1
    3 years ago, the S&P was 880. And up 54% since. The 18%/yr is both unremarkable and unsustainable. (smile-face) Jul 16, 2012 at 19:59

1 Answer 1


You have a number of choices, of course. You can leave it with the current company, if they permit it. If you leave it there, you can't make deposits (so number 2 is out, not an option).

You can transfer the funds directly to an IRA, no tax consequence, and you are left with the investing choices up to you. This is the preferred choice for most as the IRA cost is usually far less than the costs inside a 401(k).

You can transfer the funds to the new employer 401(k). This has a number of benefits. 401(k)s offer a bit better level of protection from creditors. The 401(k) allows retirement withdrawals at a separation after age 55, as compared to the 59-1/2 for the IRA, and last, the 401(k) usually has a borrowing provision. While consensus is that 401(k) loans are 'bad,' I still believe they are preferable to any retirement withdrawal.

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