I have three 401K accounts. One from my current job and two from old jobs. The two from old jobs were substantial enough that I didn’t need to take a distribution and roll them over, so they just sit there bobbing up and down with the market, but not growing from new investment cash.
They are all with reputable investment firms, and are all similarly invested (mostly growth stock funds with a little diversity). Is there any good reason why I should roll these into my current companies funds? Is there any reason why I shouldn’t just let them ride where they are?
Theoretically, in leaving your old IRAs in place while your new stuff is in a different fund, you are diverisfying against the bad mangement of any single fund–but this is probably extremely slight in benefit.
The loss of growth from new cash NOT put into the old accounts should be exactly offset by the growth of new investment in your new accounts (I’m sure you already realized this:))
As long as you are happy with the investment mix, (important issue) the only question is whether you get some sort of advantage by moving your money to your current employer’s plan managers. Do they charge less? Does you employer match? Are they getting a better return? Do you have a better personal relationship with one or the other? What tax consequences are there? etc.
If not, then I don’t see why there would be a difference.
BUT OF COURSE, ask an advisor who can sit down with you and run the numbers.
My amateur advice (a financial adviser has actually told me this before also) would be to roll the two old ones over to an IRA and not into your current 401k. This comes from the age old advice of not having all of your eggs in one basket.
I would seriously talk to a financial adviser since they can give you the most educated advice on diversifying your cash.
In mid-2003 and early 2004 the Department of Labor and Internal Revenue Service respectively released guidance which basically stated that employers can charge account maintenance fees to the accounts of terminated employees in their 401(k) plans. Keep an eye out for such fees, and when your old employers start to charge you, rollover to your current employer’s plan.
I rolled over my 401K funds to a rollover IRA at the same brokerage firm where my investment account is located. You can get higher levels of service by having a larger sum in multiple accounts at the same brokerage firm. Plus you have an almost infinite choice of stocks or mutual funds to invest at a brokerage firm. Most 401K plans limit you to a dozen or so funds. Finally, the charges and hidden fees can be quite high in a 401K plan, but with a rollover IRA, you can select a low-fee firm, like Vanguard.
One advantage to rolling the old 401(k) over into your new employer’s plan is that I think this will make those funds available for loans. Now, I don’t personally happen to like the idea of taking a loan against that money, that retirement money should (IMO) be nearly sacred. However, it is something to consider.
Aside from that, I’d agree with what others have said about watching for fees, seeing if you still like the investment options, etc.
I found it difficult to evaluate the fund choices in my 401k plan because, for the most part, they weren’t listed in the Morningstar or other ratings. So another advantage of a rollover IRA is that you can invest in most of the top-rated funds. Some funds are unavailable, because they’re closed to new investors or are available only to customers of particular brokerage firms.
As Mama Zappa mentioned, you can borrow against a 401k, while you can’t do so against a rollover IRA, so that’s an argument for transferring the funds to a 401k. (But I agree that 401k loans are a bad idea.)