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A broker called me to discuss my 401K investments that were made while I worked at a company that was recently acquired by another. The discussion is about rolling those investments from where they currently are into other (IRA) investments.

I asked if I could invest in the same funds that they are in now (I am very happy with their performance) and he said no, they are closed funds.

I asked him how long I had to make my decision, and he seemed to say there is no strict limit and the funds will remain invested as they are until I move them. He didn't go so far as to say I could leave them there indefinitely.

This leaves me confused, because I was initially under the impression that I am required to move the investments, but on the other hand, it seems like I can leave them there for as long as I want with no negative effect.

For what it's worth, the broker is from the same brokerage that manages other accounts for me. I'm assuming that this is a coincidence. He indicated that the activity he is calling about is separate from activity for my other accounts and he would have to call my accounts manager to put any changes of this 401K into effect, and the processing could take a few days.

Is there any requirement that I take any action? Or can I just leave the investments as they are? Is there a downside to leaving them as they are?

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Is there any requirement that I take any action? Or can I just leave the investments as they are?

You'll have to check with the plan manager. There's no requirement in general, but there might be all kinds of things happening with that specific plan that may create such a requirement (for example, IIRC some companies do not allow ex-employees to keep their 401k accounts).

However, it is more likely an attempt to create a sales commission by an over-eager sales person who wants another fat IRA account on his record.

Is there a downside to leaving them as they are?

Depends on the funds' performance, expense ratios and the plan fees. Many times ex-employees pay more in fees than current employees. But, if you're satisfied with them - don't see any.

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    Downside - If OP wishes to do a back-door Roth account, money in a traditional IRA can be an issue. Aside from that, agreed, I'd look at investment choices and fees. – JoeTaxpayer Oct 16 '13 at 17:53
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    I don't think that very many kick ex-employees out of the plan, unless the balances are very low (under $5,000). – mhoran_psprep Oct 16 '13 at 18:04
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    Plus 1 for this: "However, it is more likely an attempt to create a sales commission by an over-eager sales person who wants another fat IRA account on his record." – Pete B. Oct 16 '13 at 19:06
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Fidelity has a write up that is much more comprehensive than I could ever write... check it out. I think it answers all your questions: https://www.fidelity.com/viewpoints/401k-options

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    That is a nice link with good info, but our community prefers to have the relevant portions of the link quoted here (with citations of course) for the common even that links go bad. Comment back – MrChrister Oct 16 '13 at 17:59
  • That is a point I did not consider - a link going bad. I will keep that in mind for future questions/answers. I believe the OP has a substantial answer from littleadv so will not bother re-hashing the points made there unless I come across something of additional value. – TS Haines Oct 16 '13 at 20:35

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