My employer started offering a 401(k) plan a couple years ago with no employer contribution (we are a small company). I signed up as it seemed like a good way to force myself to save for retirement. Over the years I have become extremely unhappy with the company we use, mostly because they frequently "lose" contributions. I'm not talking about a short lag time, but months where I see no new contributions listed despite money coming out of my paycheck every other week. They always eventually fix it (although how would I know if they're really making it right), but it has happened at least three times, and gone on for months every time. I've never really felt comfortable that I could log in and see a true accounting.
Not realizing there are rules against rolling over a 401(k) while still employed, I made plans to open an IRA, thinking I could roll my money over and close down the 401(k). I've since read about in-service rollovers and know that I am not eligible. At this point, it seems like I have two options:
- Remain in this 401(k) with a company I wouldn't trust to balance my checkbook until I switch jobs (not currently on the horizon).
- Stop contributing to the 401(k), open an IRA, and contribute to that instead.
Given the lack of an employer contribution, are there any downsides to (2) besides the minor annoyance of having two accounts? The 401(k) is modest (less than $10,000). Are there, for instance, significant interest losses in having my money split between two accounts in this way?