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Consolidating "Old" 401k's


"How can I track down all my old 401(k)’s from former employers and consolidate them into one account?" 

Consolidating all your “old” 401(k)’s into one account is actually fairly easy.  You have a couple of options.  If your current employer’s 401(k) accepts rollovers, then you can roll your “old” 401(k)’s into your current 401(k).  You could also roll all the “old” 401(k)’s into a traditional IRA.

The most important item to consider is that you perform a direct rollover.  This is handled by the institution that you are rolling the money to.  The most important aspect is that you do not receive or handle the money at any time.  Let me reemphasize that–do not receive or handle the money at any time.  There is a way to complete the rollover even with receiving the money, but trust me you do not want to go through that headache and you will need to have cash available to complete the transaction to offset the 20% tax that will be withheld from your withdrawal.

The last point I would like to make is that it is important to know why you are looking to consolidate your “old” 401(k)’s.  If it is simply for convenience, then you may be limiting some potential financial benefits now and in the future.  Most of these benefits surround Roth conversions for high income earners and may or may not be pertinent to your situation.  The bottom line is their should be a definitive reason for moving your money out of your current 401k and a definitive reason for whether to move it to a current 401k or a traditional IRA.  I've seen far too many people move "old" 401k funds without any reason for moving it.  Convenience is not a good enough reason.