401(k)-IRA Leave It or Move On? When Job Hopping

by Prof. Robert Bloink and Prof. William H. Byrnes

With each passing year, the American workforce has become more mobile. While employer-sponsored 401(k) plans are now an incredibly common employment benefit, it’s also incredibly common for employees to move between jobs with increasing frequency. These factors collide to leave countless individuals faced with an important decision: whether to leave their funds invested in a former employer’s 401(k) or to move their funds to an IRA. Because of auto-enrollment and automatic payroll deductions for elective deferrals, many employees currently make very infrequent decisions with respect to their 401(k)s. The decision is an important one—and one that shouldn’t be rushed. Careful consideration should be given to the differences between the two most common versions of the traditional retirement savings account when deciding whether to leave funds in a former employer’s retirement plan.

Investment Options