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Opinion: Is it time to move money from old retirement plans?

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Over the course of a lifetime, the average American changes jobs 12 times and works for five to seven employers, according to federal stats. If this rings true for you, you may be among the millions of people who have started 401(k) or 403(b) plans with multiple companies over the years.

If you have money sitting in those old workplace retirement plans, you may be wondering what to do with them. There are three primary actions to consider:

1. Roll over the funds into an individual retirement account.

2. Keep your accounts with your former employer.

3. Roll your old accounts into your current employer’s plan.

Here’s what you should know about each option.

IRA rollover

All too often, it becomes easy to forget about your retirement accounts that were established through savings plans offered by previous employers. The longer you are away from that job, the more removed you may become from the retirement plan that you left behind.

One popular option to consider is to roll any “orphaned” workplace retirement plans into an IRA. This can help you consolidate assets in a single account and keep better tabs on how the money is invested and how those investments are performing.

Among other reasons to consider moving money from a workplace plan to an IRA:

• You typically have a much wider choice of investment options in an IRA. In most workplace plans, the investment universe is limited.

• With an IRA, you own the account. This contrasts with a 401(k) where you are a participant in a plan but not the account owner.

• Having all your retirement savings in a limited number of accounts makes it easier to manage your asset allocation strategy. You’ll feel more confident that your investments are working well together.

If you are past age 59 and a half and have money in a workplace retirement plan where you currently work, your employer may offer the option to roll some or all the money from that plan to an IRA. This so-called “in-service distribution” allows you to move assets to an IRA even while you continue to work with your employer. In some cases, your ability to continue to contribute to the workplace plan may be suspended for several months if you utilize the in-service distribution option.

Stay with former employer

In some instances, it may be advantageous to retain money in your existing 401(k) or 403(b) plan. This is most beneficial if any of these scenarios apply:

• Company stock is included in the plan. There may be more tax-advantageous ways to access those assets when you take distributions from the plan.

• If you stop working at age 55. You have the ability then to access money from your workplace plan without incurring a 10% penalty (normally, you must wait until age 59 and a half to avoid a penalty).

• You intend to keep working beyond age 72. If that’s the case, money in your workplace plan is not subject to required minimum distribution rules until you actually stop working. However, traditional IRAs are still subject to RMDs even if you remain employed.

Move plan to current employer

Not all employers will accept 401(k) or 403(b) rollovers from a previous employer’s plan, so check with your new employer before making any decisions. If the option is available to you, there are a couple benefits to note:

• Your money will have the chance to continue to grow tax deferred.

• Having only one retirement account can make it easier to manage your retirement savings.

But before making this decision, make sure to fully understand the rules of your employer’s plan and consider the range of investment options available within it.

So, should you leave it or roll it? The answer depends on your own circumstances and is best determined after strategizing with financial and tax advisers.

Paula Dougherty is a certified financial planner and private wealth adviser with Achieve Private Wealth, Ameriprise Financial Services Inc. in Springfield. She can be reached at


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