Read the first part of this article for more 401k Rollover options.
401k Rollover Options
Another option you have when you need to do a 401k rollover is to simply leave the money where it is in your old 401k. This can be a good solution for the short term, but long term it’s probably not the best choice. If you’re in the middle of changing careers, chances are you have your hands full and do not want to deal with your old 401k right now. That’s fine. Leave it with your old employer for 6 months or so until you get your feet under you. Leaving the money in your old 401k for too long can be a bad decision though, for a couple of reasons. First, you cannot contribute to the account anymore, and you will not be getting any employer contributions. Second, you’ll only have access to the investment options made available by your old employer. Rolling the money into a new account will give you access to more investment vehicles.
Your third option for a 401k rollover is to roll the money into the 401k offered by your new employer, assuming that there is one. This option has the advantage of keeping your money together in one account, instead of having it spread out among different accounts and investment institutions. The drawback to this is that you are limited to the investment options offered by your new employer. If they are too limited for your investing style, then you’ll probably want to seek out some other options.
The last option for doing a 401k rollover is to move your money into an IRA with a broker or mutual fund company. This option gives you the most flexibility for investing your money, especially if you choose to go with an independent broker. If you move it into an IRA with a particular mutual fund company, you’ll only have access to the funds offered by that company, but this will still probably be a greater selection of investments offered by most employers.
The important thing to remember when you are doing a 401k rollover is that this is your money and it’s there in that 401k for a reason. It’s too easy to forget about the money in your old 401k and never get around to doing anything with it. This is especially easy if you’re in the middle of a job search or a career change. But once things are relatively normal again, make sure to take the time to decide on what you want to do with the money you have invested. Making the “right” choice doesn’t matter so much as deciding to make any choice.