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I worked for a company between 2010-2014, and have an established retirement plan through T. Rowe Price which they matched into. In 2014, I changed jobs and had a new retirement plan opened under Charles Schwab. I now have two 401(k) accounts (both traditional and roth in each).

My T. Rowe Price doesn't have a ton of money in it, about $24,000 -- it's return since inception is 12.73%.

My Schwab account is my active 401(k) with employer matching. The funds in this one is about double my T. Rowe Price account, and the return since inception is 11.24%~

Should I consider consolidating these two accounts into a single account (likely my current account through Schwab), or are there potential upsides to keeping these chunks of money separate for now?

  • I would not, if you're getting similar returns on both. It's simply the principle of not putting all your eggs in one basket, in case one of them turns out to be the next Bear Stearns. – jamesqf May 16 '18 at 17:53
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    Check the fees; once you leave an employer sometimes they'll charge it to you directly. – Kevin May 16 '18 at 17:55
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To me, return isn't a huge consideration when deciding to roll over a 401(k) into an IRA or another 401(k). The main differences to me are :

  • convenience - it is typically less hassle to have all investments in one place (or as few as possible)
  • options - IRAs typically have more investment options that 401(k)s depending on the broker
  • fees - you might be able to buy funds in an IRA with similar performance but lower fees

I personally have rolled my 401(k)s into IRAs after changing each job (3 times now). It takes some time to choose your investments and allocation since your choices are almost unlimited compared to the choices in my current 401(k), but it has given me access to instruments that my 401(k) doesn't offer, like REITs, and allowed me to experiment a bit more in options and single stock purchases. Side note, I don't recommend these unless you know and accept the risks involved. I only "play" with 5% of my balance in case I screw up and lose most of it - which has happened.

I also have two accounts to manage instead of 4. I could have rolled everything into my current 401(k), but it's worth it to me to have the options I mention above.

Your contributions and match are going to have a MUCH more significant impact on your future balance. About 20% of my IRA was contributed by me. 20% is company matches and 60% is growth. If my growth was only 50% because returns were slightly lower, my contributions would still be only 25% of my portfolio. So make sure you contribute as much as you can, get as much match as you can, and the rest is gravy.

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I wouldn't pay much attention to performance, especially timeframe you're talking about. Everyone's up double digits, 10-15% annual return; you're happy that your funds are in that group but it's nothing to be impressed by.

The reason I'd consider consolidating is primarily that you might be able to buy into better funds. Vanguard for example (what I am familiar with) has "admiral shares" of some funds that have much lower fees; but they have a minimum investment of $10k to $20k typically. Consolidating all of your retirement accounts gives you a better chance to hit those minimums.

Secondly, I'd look at the fees the different brokerages charge, and see if one is better than the other in that direction.

Finally, is it simpler for you to have one account instead of two? Weigh that against the advantage diversification provides (what if one broker goes bankrupt due to some massive crash or malfeasance). The latter is low chance of occurring, cough Lehman brothers cough, and isn't a total loss typically (you should ultimately get your shares, usually), but it's a big problem if it does happen; but having just one account makes it a bit easier to manage and see returns. It's also a bit more risk of someone hacking your account info and draining the account.

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You're asking if you should do a "direct rollover" from your former employer plan to your new employer plan. There's nothing wrong with making the transfer if you like the new plan better.

I recommend contacting Schwab to make sure you make the transfers in the correct manner without incurring any penalties or extra hassle. Direct rollover is the easiest method.

It's also fine to leave the money where it is -- it's really a matter of personal choice.

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