I just left my job — should I roll my 401(k) into an IRA or leave it in my former employer’s plan?

It depends on your goals, investment preferences, and how much control and flexibility you want over your retirement savings. Both options can make sense, but they serve different purposes.

Option 1: Roll your 401(k) into an IRA

Rolling your 401(k) into an IRA often provides greater flexibility and personalization.

Potential advantages:

  • More investment choices beyond the limited fund lineup of most employer plans
  • Consolidation of multiple retirement accounts into one place
  • Potentially lower costs depending on the IRA custodian and investments selected
  • Greater flexibility for withdrawals, Roth conversions, and estate planning
  • Ongoing professional management if working with an advisor

Things to consider:

  • IRAs may have less creditor protection than 401(k)s in some states
  • Rolling funds incorrectly could trigger taxes or penalties (a direct rollover avoids this)

Option 2: Leave your 401(k) with your former employer

Keeping your assets in the existing plan can still be a viable choice.

Potential advantages:

  • Strong creditor protection under federal law
  • Access to institutional-priced investment funds that may not be available in an IRA
  • No immediate action required
  • If you left your job at age 55 or older, you may retain penalty-free access to funds (the Rule of 55)

Things to consider:

  • Limited investment options
  • Less flexibility for future planning
  • No longer eligible to contribute to the plan
  • Less proactive oversight

Other option: Roll into a new employer’s plan

If your new employer allows it, rolling your old 401(k) into a new 401(k) can help consolidate accounts while maintaining plan-level protections.

Which option is right for you?

The right decision depends on factors such as:

  • Your age and retirement timeline
  • Investment preferences and cost sensitivity
  • Need for flexibility or income planning
  • Tax strategy and estate planning goals

One of our financial professional can help you compare these options and ensure the rollover is handled correctly and tax-efficiently.

Don’t leave this decision to chance. Our firm specializes in helping individuals optimize retirement assets after a job change. Book a strategy call today to get clear guidance, avoid costly mistakes, and put your retirement savings to work with a plan built around your goals.