Smart Strategies for 401(k) Rollovers to IRAs

Here’s how to keep your nest egg intact when you change jobs

When you leave a job, there are three ways to preserve your retirement account balance: leave it in the existing 401(k) plan, roll the money over to an IRA, or transfer the balance to another 401(k) plan at your new job. The hard part is choosing the option that preserves as much of your retirement savings as possible. Here are some strategies to minimize taxes and fees on your retirement account when changing jobs:
Wait until you are vested.
You don’t get to keep employer contributions to your 401(k) until you are vested in the plan. If you leave the company before you are fully vested, you could forfeit some or all of your 401(k) match. If you have control over when you leave the company and are close to becoming vested, staying with the firm for a few more months could add thousands of dollars to your nest egg. “Look at how much you would get if you vest and how much you are going to make at this other employer and also the new match or profit-sharing contribution,” says Barbara Camaglia, a certified financial planner for Legacy Financial Advisors in Beachwood, Ohio.

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