PLANADVISER - Summer 2023 - 8
Client Material:
Consolidating Retirement Accounts
T
he average American worker changes jobs
multiple times1
provide a lower return.
, and while a new job often
means better pay and benefits, it can also result
in a forgotten retirement account. In some cases,
depending on your retirement investor's situation, it
might make sense to leave retirement savings in a
prior employer's plan, but consolidating retirement
accounts in a new employer's plan or individual
retirement account may lead to better outcomes.
Review with your retirement
investors these key
considerations of consolidation:
Potential risks of leaving a retirement
account with a prior employer
Higher Fees. Consider the investment and administrative
fees assessed by your old employer, new employer and
IRAs. If your old employer has higher fees, they could eat
into account balances.
Losing Track. Multiple accounts can make it hard to understand
your total retirement savings and determine if your
asset allocation is right for your goals. You can also lose track
of them.
Potential Lower Investment Returns2
. Plans are allowed
to automatically roll over accounts of less than $5,000 into
an IRA2
SPONSORED
, which may not offer the same investment options
as your new employer's 401(k) or offer investments that may
Cybersecurity. Having multiple accounts can increase
chances of fraud or theft. Reducing the number of accounts
may reduce your exposure.
Potential benefits of leaving a retirement
account with a prior employer
Lower Fees. Your old employer may have lower fees than
your new employer's plan or an IRA.
Access to Investments. While most plans offer a range
of funds, you may want to maintain your access to a fund
offered by your prior employer.
79% of defined contribution plan
participants consider it important to
consolidate retirement assets in as
few accounts as possible.3
Let's look at how these potential risks and benefits could play
out. Amala starts her career at age 23 and changes jobs
every three years. Along the way, she participates in each
employer's 401(k) plan, accumulating a balance in each. At
age 35, Amala finds her dream job and is able to save more
and benefit from her employer's company match. She ends
up working there for the rest of her career.
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PLANADVISER - Summer 2023
Table of Contents for the Digital Edition of PLANADVISER - Summer 2023
Leadership in Practice
SECURE 2.0 Insecurities
The Need for NQDC Support
Advisers’ Huge Opportunity
Do 3(38)s Assume More Risk?
Match for Student Debtors
'The Question Stands
PLANADVISER - Summer 2023 - C1
PLANADVISER - Summer 2023 - C2
PLANADVISER - Summer 2023 - 1
PLANADVISER - Summer 2023 - 2
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PLANADVISER - Summer 2023 - 4
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PLANADVISER - Summer 2023 - 12
PLANADVISER - Summer 2023 - 13
PLANADVISER - Summer 2023 - 14
PLANADVISER - Summer 2023 - 15
PLANADVISER - Summer 2023 - Leadership in Practice
PLANADVISER - Summer 2023 - 17
PLANADVISER - Summer 2023 - 18
PLANADVISER - Summer 2023 - 19
PLANADVISER - Summer 2023 - 20
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PLANADVISER - Summer 2023 - 25
PLANADVISER - Summer 2023 - 26
PLANADVISER - Summer 2023 - 27
PLANADVISER - Summer 2023 - SECURE 2.0 Insecurities
PLANADVISER - Summer 2023 - 29
PLANADVISER - Summer 2023 - 30
PLANADVISER - Summer 2023 - 31
PLANADVISER - Summer 2023 - The Need for NQDC Support
PLANADVISER - Summer 2023 - 33
PLANADVISER - Summer 2023 - Advisers’ Huge Opportunity
PLANADVISER - Summer 2023 - Do 3(38)s Assume More Risk?
PLANADVISER - Summer 2023 - Match for Student Debtors
PLANADVISER - Summer 2023 - 37
PLANADVISER - Summer 2023 - 'The Question Stands
PLANADVISER - Summer 2023 - 39
PLANADVISER - Summer 2023 - 40
PLANADVISER - Summer 2023 - C3
PLANADVISER - Summer 2023 - C4
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