Here's a question a CNN Money reader asked:
I'm 59, and I just got a new job. Should I move my IRA to the 401(k) plan or keep it separate?
Here's their response:
Are the fees lower in your 401(k) than in your IRA? Would you like all your retirement dollars in one pot? Do you prefer your 401(k)'s investment options?
If the answers are yes, yes, and yes, a roll-in could make sense, says Kevin O'Fee, a defined-contribution management executive at Fidelity.
Here's what my response would have been:
Is that it? Just "no"? Yep. Just "no."
Why would I say that? Because I know, for the vast majority of people:
- The fees are NOT lower in your 401(k) than in your IRA.
- You would NOT like all your retirement dollars in one pot (especially if that has a connection to your employer).
- You do NOT (or at least should not) prefer your 401(k)'s investment options.
How can I be so sure?
I have yet to run into any 401k where the fees are lower (they are usually MUCH higher) and the investment options are better than a simple Vanguard IRA. Plus, you have total control of your own destiny with Vanguard, something you do not have in a 401k.
I have NEVER moved an IRA into a 401k. In addition, every time I have changed jobs I have ALWAYS rolled my 401k over into a Vanguard IRA. I don't see any way a situation would arise where I'd go with a company 401k over Vanguard, but I guess it could happen. Just doesn't seem very likely.
How about you? Would you advise differently?