What is a 401k rollover and why should I do it?

At a basic level a 401k “rollover” just means moving money from your tax-advantaged retirement account created and controlled by your employer to a tax-advantaged account that you control. If you’ve recently left a job, or maybe even not so recently, you’ll want to take your 401k money with you.

Here are 3 of the main reasons to roll your old 401k into an IRA:

1. The first major reason to roll your old 401k into an IRA is that the fees on most IRAs are significantly lower than the fees on 401ks. The lower costs for IRAs largely have to do with the lack of administrative costs which 401ks have.

2. The second reason to roll your 401k into an IRA is that your investment options in an IRA will be much greater. Whereas in most 401k programs your are limited to a small group of expensive mutual funds, IRAs have very few limits in what you can invest in. You can buy stocks, bonds, index funds, etfs, and even those expensive mutual funds. But the key is that you have choices over how you manage your nest egg.

3. The third reason to roll your old 401k over into an IRA is to have all your retirement assets in one place which makes managing your portfolio much easier.