When you change jobs or retire, you’ll want to decide what to do with that old 401k plan from your previous employer. You really have 3 good options - leave it there, roll it over to your new plan if you’ve changed jobs and your new employer offers a 401k, or you can roll it over to an IRA. But how do you know which option is right for you? 

 

So this week, I’m teeing up for you 5 questions that you’ll want to ask before you do anything with that old 401k. 

 

Today’s question that you’ll want to ask before touching that old 401k is: How will the fees change? 

 

Retirement plan fees vary widely. Often the larger the 401k plan is, the cheaper it is. So if you go from mega-multinational-household-name company to mom and pop new 401k, chances are the old 401k from uber-large conglomerate is going to have lower fees compared to your new plan. 

 

The important point here is that while fees alone shouldn’t drive your decision about what to do with your old 401k, it should be a consideration. So it’s important to understand the fees in your old plan, and how those fees compare to your new 401k or your IRA that your considering transferring your money to. 

 

401k plan fees are still a bit muddled, despite some major headway made several years ago with some new rules aimed at better fee transparency. 

So if you have no clue how to figure out what your 401k fees are, I have a little workaround for you. Call the provider where your 401k plan is held. Ask them for a document called the 404a-5 Participant Fee Disclosure Document. You’re required to receive a copy of this document at least once a year, but your plan provider should be able to send you another copy if you request one. This 404a-5 fee disclosure document should clarify in plain english the fees in your 401k.

The point here is that you need to know what you’re paying in your old plan if your money is still parked there, and know what the cost is of investing with the new provider - whether that be through a 401k plan with your new job or an IRA. Either way, arm yourself with the cost information so you can make a more informed choice. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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