You Don’t Have to Rollover Today

This is not a decision you need to make immediately. You don’t have to tell your old employer what you want them to do with your money on the day you hand in your resignation or at the leaving party.

The time to decide is when you know the difference between your old employer’s 401(k) and your new employer’s 401(k). You’ll need to talk with the personnel department at your new employer and ask them about the performance of their 401(k). Make sure that you know the size of their returns and the amount of expenses that the fund charges. Compare those figures to the numbers that your old employer provides.

If you can see that the 401(k) at your old employer is performing better than the 401(k) at your new employer, then you should probably leave the money there. Just make sure that you don’t forget about it. As you build your career and move from company to company, there is a danger that you won’t remember all your old 401(k)s. Your money will remain growing in the fund of a place you worked at a couple of decades ago, but you’ll forget to take the withdrawals.

Every time you choose to leave a 401(k) in place, make a note. Keep track of the speed with which it’s growing. Make sure that you include that money, and its growth rate, as you calculate whether your retirement plans are on track.