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Q. I’m getting ready to change jobs. The new job has a 401(k) and my old one did too. I plan to save as much as I can. How can I decide what to do with the old plan — leave it there or roll it into my new one?
— Worker

A. Congratulations on your new position.

We’re also glad to hear that saving for the future is a goal for you.

There are two options to consider when it comes to the 401(k) from your former employer and both involve a rollover of the assets into another retirement account — either your new 401(k) or an IRA, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

She said most employers will allow the rollover of a plan from another employer, but you should confirm that this is possible first.

“These days, many rollovers can take place electronically by going from one custodian to another,” she said. “In the event that a check is issued, you would have 60 days to get the money deposited into the new account to avoid income taxes — it would be considered a withdrawal — and possible penalties.”

There are several things to consider before making the decision of whether to roll the funds to your new employer’s plan or an IRA, she said.

Start by looking at the expenses in the employer plan.

“Are there administrative fees that you wouldn’t pay if the old 401(k) rolled to an IRA? This would translate into saved dollars,” she said, noting that the fees for the 401(k) should be available in the plan document or the custodian’s website.

Then see if the employer plan offers a broad range of investment options, along with a selection of target date funds, and consider the expenses for those funds.

“Comparing the expense ratios between the 401(k) platform and an IRA may enable you to save a few dollars by using an IRA,” she said.

Then see if you will be able to receive assistance from your 401(k) provider when it comes to deciding on your investments and how to allocate the account. With an IRA, you may be on your own and the support may be worth the additional cost, she said.

“In terms of your savings goals, it’s always good to try to save enough to be eligible for any employer match that may be available so that you don’t miss out on that free money,” Mott said. “Your new employer’s 401(k) documents should give you the required limit.”

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This story was originally published on March 13, 2023. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.

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