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Five Reasons to Roll Over Your Old 401k into an IRA, #257

Release Date: 06/10/2025

Five Reasons a Brokerage Account Might Be Better Than an Annuity for Your Investments, #260

Retire With Ryan

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Retire With Ryan

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Seven Smart Reasons to Leave Your Old 401(k) with a Previous Employer, #258

Retire With Ryan

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Five Reasons to Roll Over Your Old 401k into an IRA, #257

Retire With Ryan

In today's episode, I’m diving into a topic that’s top-of-mind for anyone who’s switched jobs: what should you do with your old 401(k) plan? I discuss five key reasons why moving them into an IRA could simplify your financial life, from consolidating accounts for better control to gaining access to a broader range of investment options, reducing fees, optimizing Roth and after-tax funds, and making it easier to work with a financial advisor. Whether you’re planning your next career step or just want to make your retirement savings work harder for you, this episode is packed with...

Retirement Reality Check, with Michael Sheldon #256

Retire With Ryan

This week on the show, I’m joined in person by investment veteran Michael Sheldon, who brings over 26 years of experience in the financial services industry. We dig into essential strategies for investing as you approach and enter retirement, covering asset allocation, diversification, income planning, and how to handle inevitable market volatility. Whether you’re a pre-retiree, a recent retiree, or just looking to strengthen your investment approach, Michael offers some great actionable insights designed to help you build a resilient portfolio and stay on track toward your long-term...

Breaking Down the FERS Retirement System for Federal Employees, #255

Retire With Ryan

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Four Costly Mistakes to Avoid When Claiming Social Security While Working After 65, #254

Retire With Ryan

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Applying Warren Buffett’s Investment Wisdom to Your Life, #253

Retire With Ryan

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Top Five HSA Mistakes That Are Costing You Money and How to Avoid Them, #252

Retire With Ryan

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Six Dave Ramsey Tips That Could Hurt Your Retirement Plan, #251

Retire With Ryan

Radio personality Dave Ramsey is a huge name in the personal finance niche. While he’s celebrated for helping countless listeners take control of their finances, many of his recommendations have sparked debate within the financial planning community. I’m going to break down six of the most controversial opinions promoted by Ramsey, including advice on retirement withdrawals, debt payoff strategies, Roth accounts, investing approaches, mortgages, and the use of credit cards. I will also weigh up the pros and cons of Ramsey’s methods, highlighting where they might help and where they...

More Episodes

Whether you’re planning your next career step or just want to make your retirement savings work harder for you, this episode is packed with practical advice to guide your decision. Stick around until the end, and don’t forget to tune in next week when I cover situations where rolling over your 401(k) might not be the best choice!

You will want to hear this episode if you are interested in...

[00:00] Vested retirement funds offer four options: keep them in the plan, or withdraw and pay taxes
[04:46] Rolling over a 401(k) to an IRA offers more control and access to your retirement funds, preventing forgotten accounts as you change jobs
[06:41] Consolidate investments for simplicity and control; update records if keeping old retirement accounts
[12:05] Convert Roth contributions to a Roth IRA to start the five-year period and ensure future gains grow tax-free, especially for after-tax funds in a 401(k) without in-plan Roth conversions
[13:13] Rollovers to an IRA can facilitate Roth conversions and allow financial advisors to manage retirement accounts.

Consolidate Old 401ks for a Smoother Future

When you change jobs, it's important not to leave your old retirement accounts behind. For many Americans, the primary vehicle for saving for retirement is their employer-sponsored 401(k) plan. But what should you do with that 401(k) once you’ve moved on?

Rolling it into an Individual Retirement Account (IRA) may be the smart move, offering control, flexibility, potential cost savings, and tax advantages. Let’s walk through five compelling reasons why a 401(k) rollover into an IRA might make sense for you.

1. Greater Control and Account Consolidation

One of the biggest headaches of changing jobs multiple times is having various retirement accounts scattered across different institutions. Not only is it difficult to keep track of these accounts, but there’s the risk that you might forget about them entirely. By rolling old 401(k)s into a single IRA, you consolidate your investments, making it easier to manage and monitor your retirement savings.

With all your funds in one place, you’ll have more control over your asset allocation and will be better positioned to implement a cohesive investment strategy. Additionally, consolidating accounts reduces the administrative burden of managing multiple logins and statements.

2. Expanded Investment Choices and Flexibility

Most employer-sponsored 401(k) plans offer a fairly limited menu of investment options, typically ranging from a dozen to twenty funds. These may or may not align with your preferred asset allocation strategy, and some plans are more limited than others.

By rolling over your 401(k) into an IRA at a major discount broker like Schwab, Fidelity, or Vanguard, you unlock a much broader universe of investment possibilities, mutual funds, exchange-traded funds (ETFs), stocks, bonds, CDs, and more.

This flexibility lets you fine-tune your portfolio, properly diversify, and better tailor your investments to your risk profile and retirement timeline.

3. Potential for Lower Investment Costs

401(k) plans, particularly those from smaller employers, often feature higher administrative and fund expenses, sometimes reaching 1% or more in annual fees. These extra costs chip away at your investment returns over time.

With an IRA, especially when investing in low-cost ETFs or mutual funds, you can often significantly reduce the expense ratios you pay. Over decades, even a modest reduction in annual fees can translate into thousands more in retirement savings due to the power of compounding.

4. Managing Roth and After-Tax Contributions

Many 401(k) plans now offer a designated Roth component as well as avenues for after-tax contributions. When you roll over your account, this is a valuable opportunity to ensure your Roth and after-tax money are treated with optimal tax efficiency. For example, rolling Roth 401(k) funds into a Roth IRA starts the five-year clock for tax-free withdrawals on earnings, which is critical for planning your retirement withdrawals.

Additionally, an IRA rollover can be structured to split after-tax contributions into a Roth IRA, giving those funds tax-free growth potential rather than the more limited advantages offered inside the 401(k).

5. Access to Professional Management

If you want professional help managing your retirement investments and financial planning, rolling your assets into an IRA is almost always a prerequisite. Advisors generally cannot manage assets held within a former employer's 401(k) platform, but with funds consolidated in an IRA at a major custodian, they can actively manage your investments, make ongoing adjustments, and assist with tax planning and distributions as you transition into retirement.

Assess Your Situation Before Moving

While rolling over your old 401(k) to an IRA offers considerable advantages, it’s not always the perfect solution for everyone. Each situation is unique, and certain protections or features (such as early withdrawal options or creditor protections) may be stronger inside a 401(k) for some individuals.

Be sure to review your specific circumstances carefully, ideally, with a trusted financial advisor, before making any big moves. A well-considered rollover could make your road to retirement much smoother, giving you more control, lower costs, and better investment options along the way.