I left my fulltime job mid 2017. I am not earning since then (no pay roll being generated). Since many years I have changed many jobs. Each job had a 401k plan which I maxed out every year. So I have 5 different 401k plans spread with different 401k providers (fidelity, wellsfargo etc). I have not been taking care of these 401k and therefore, I am not seeing growth to my hard earned money. I may or may not have a payroll/salary with 401k

Based on this, below is what I am trying to understand:

  1. Should I rollover 401k from all these providers and consolidate it in to 2 or 3 top providers? What is a good approach in doing something like this?

  2. Can 401k be rolled over to IRA only in my situation?

Thank you for your time

  • I guess your window to rollover into a 401(k) closed when you left the job that sponsored the plan which the funds would have gone into. Rolling into an IRA is definitely possible. One thing to be aware of is that IRAs are not as protected against legal claims as 401(k) plans. But they give you far more control. – Ben Voigt Apr 26 '18 at 6:38
  • To answer the question of whether you should move the funds, you should provide some information on what rate of return you have been earning in the existing plans, and what expenses and fees you are being charged. – Ben Voigt Apr 26 '18 at 6:38
  • 2
    One more thing to consider. Since you are not making any income it might be a good time to convert them into a Roth. The drawback is that you will need the money to pay the taxes. – kweinert Apr 26 '18 at 8:11

In your case, I would recommend rolling over all your 401Ks into a single rollover ira, or into your current 401K. Some 401k plans pass fees onto participants, and if that is the case you probably do not want to roll into that plan.

Vanguard, Fidelity, and Schwab all offer free to very low cost plans for rollover money. I have my favorite and others have theirs. You can poke around on each of the web sites to see which one you like best. Their customer service department will help you with the rollovers and making sure it is done correctly.

It is possible for you to get the rollover money directly. However, that is inadvisable as the 401K provider is required by the IRS to withhold a large percentage of the balance. Then, in order to avoid tax consequences, you have to put the full amount into the rollover account. You will have to come up with the money that was withheld!

The better option is to rollover the money directly into the new plan which does not require withholding. Again customer service departments at any of the brokerages will help you with this process.

The only caveat to rollover is if you may one day want to do a back door Roth contribution. However if you are single and have an AGI of less than 133k, then you should be fine. There are ways to avoid this small pitfall when the time comes.

| improve this answer | |

Not the answer you're looking for? Browse other questions tagged or ask your own question.