4 Reasons to Move Your Old 401(k)

Many workers leave a 401(k) behind after switching jobs for a variety of reasons: It’s not a top priority, they don’t know what to do with it, or they simply forget about it. 

Zippia, a company that helps people find career options, pulled data on the average jobs in a lifetime. Here’s what they found: 

  • The average person changes jobs 12 times in their lifetime, according to the latest available public survey data (2019).
  • The average employee stays with their employer for 4.1 years as of January 2020.
  • On average, men hold 12.5 jobs in their lifetime, while women hold 12.1 jobs.¹

Notice this data was collected before the Great Resignation began. 

We can only expect the numbers above to increase as data continues to show workers aren’t staying put with current employers. In fact, in 2022, 1 in 5 say they’ll change jobs in the next year.²

While not all employees have a 401(k), many who do will leave them behind and fail to roll over their plans.  

Regardless of how much your old 401(k) balance is, it’s important for your financial future to understand the reasons to move your old 401(k).

Reason #1: Higher Fees

reason to move your old 401(k)

When you leave behind a 401(k), you still incur ongoing fees. These could be quite a bit, especially if you are in a high-fee plan. 

Most 401(k)s have additional management fees on top of fees charged by mutual funds. In addition, plan participants are limited to the funds offered in the plan and the expense ratios associated with those funds. 

These costs come directly out of your 401(k), which may take away more of your retirement savings than you expect.  

[Related Read: How Much Is Your Forgotten 401(k) Costing You in Potential Savings?]

Reason #2: Your Old Employer Could Go out of Business

reason to move your old 401(k)

Another reason to move your old 401(k) is that your old employer could go out of business. 

Federal law prevents a company from going out of business and taking investors’ 401(k) savings with it. However, should this happen in the future, you’ll have to spend time and energy trying to find and access your retirement funds. 

It’s more problematic if your retirement money is invested in company stock because, more than likely, if the company files bankruptcy, it will bring down your 401(k) balance. 

Check out our guide on the 5 irreversible and costly rollover mistakes.

Reason #3: You May Fail to Optimize Retirement Savings

reason to move your old 401(k)

When you leave a 401(k) behind – aside from the fees incurred – your account remains subject to plan rules, and you will continue to have limited investment options. 

In addition, you may have overlapping funds that may no longer suit your risk tolerance. If you don’t touch your old 401(k) for over a decade, you may still be invested in funds that made sense when you were in that stage of your life – not now. 

This is why we recommend periodically rebalancing your 401(k) to ensure you’re in what’s working and out of what’s not. More often than not, abandoned 401(k)s are not rebalanced, and, as a result, investors fail to optimize their retirement savings.  

[Related Read: What Every Investor Needs to Know about Rebalancing a 401(k)]

Reason #4: It’s Time-Consuming to Manage Multiple Accounts

reason to move your old 401(k)

This reason to move your old 401(k) is pretty straightforward: Why overcomplicate your financial life if you don’t have to? 

Even if you keep track of the old 401(k) plans with past employers, it’s still a pain to keep up with plan rules or have to change beneficiaries. 

This can become more of a pain when you turn age 72 and must start taking required minimum distributions (RMDs). Should you miss an RMD because you forgot about a left-behind 401(k), you will have to pay a 50% penalty on the amount you should have withdrawn.

Get Help Before You Make Your Move

reason to move your old 401(k)

It’s important to understand all your rollover options before you make a move, and seek professional help. 

Each investor’s situation is unique, and speaking with someone who can navigate the rollover process helps you make the best decision possible for your financial future. 

Have questions about rolling over your 401(k)? Book a complimentary 15-minute 401(k) Strategy Session with one of our advisors.

Book a 401(k) Strategy Session


  1. https://www.zippia.com/advice/average-number-jobs-in-lifetime/
  2. https://www.cnbc.com/2022/05/24/great-resignation-to-continue-one-in-five-likely-to-switch-jobs-pwc.html
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