When I tell people that I write about stock market investing, you might understand that I get a lot of questions. One common question is what someone can do with money in a previous employer’s 401(k) plan.
The money you have in a 401 (k) plan is your money. There may be some vesting of the employer contributions, but it is your money.
Financial advisors everywhere would love to get their hands on your retirement savings to set up investment plans. What most financial advisors won’t tell you is that you can take complete control of your money in your retirement accounts.
If you have retirement savings, typically from a 401(k) with a previous employer, you can transfer that money to a rollover IRA. Once you get the money into a rollover IRA, you have complete control over the funds.
Suppose you have funds you want to get out of a previous employer’s retirement plan. In that case, my suggestion is first to call a brokerage firm like Schwab or Fidelity and tell them you want to open a rollover IRA account, and ask what steps you should take to get the funds from your employer’s retirement. They do this all the time and will guide you through the process step by step.
(Hot tip: You can roll retirement funds from multiple employers into a single rollover IRA.)
Once your retirement funds are in a rollover IRA, you have complete control over the money. If you want to use a financial advisor, you can give them access to the account to make investments on your behalf. But if you want to make your own investment decisions, you can do so. Thousands of my Dividend Hunter subscribers use their rollover funds to follow the high-yield strategies I recommend in the newsletter.
The worst idea is to let money stagnate in boring mutual funds in a previous employer’s 401(k) plan. The plan administrator likes it because they continuously earn management fees on your money.
Many people are not aware of what you can do with the money in a previous employer’s retirement plan. You may be one of those people, or you may know someone like that. Setting up a rollover IRA and transferring the funds is a straightforward process. It’s your money—take control of it.
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