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5 Reasons You Should Consider Moving Your 401K Into An IRA

5 Reasons You Should Consider Moving Your 401K Into An IRA

November 01, 2022

Since 401(k)s are employer-sponsored retirement accounts, as you change jobs and companies you will start to accumulate multiple 401(k)s. You can choose to cash out your account, leave your account with your current employer, transfer it to your new employer, or roll your 401(k) into an IRA. Rolling your 401(k) into an IRA is an option to consider for your old 401(k) accounts. Continue reading for 5 reasons why you should consider looking into this option: 


  1. 401(k) To 401(k) Transfers Are Not Always Possible


You may think that you could just transfer the funds in your old 401(k) accounts to your new 401(k) account, but this may not be a possible route. Since 401(k)s are regulated by the employer themselves, they may have different restrictions that prevent you from completing transfers. Even if the 401(k) to 401(k) transfer is possible, it can turn into a headache as you move from employer to employer over time. By rolling your 401(k)s into an IRA, you could be limiting the amount of headaches due to different restrictions and regulations from 401(k) accounts.


  1. Lower Costs and Fees


IRAs might have lower management and administrative fees than 401(k) accounts. These fees can eat away at your contributions and earnings that you gain inside of the account, so the lower the fees, the more you get to keep your well-earned retirement funds. When looking at what brokerage you want to roll your 401(k) to, you can evaluate the different plans’ associated fees, so you have more choices and control over your investment. With an employer-sponsored 401(k), you are subject to the plan’s fee structure.

1. Fewer Accounts To Keep Track Of

As you get further into your career, you may have several previous employers. If you left your 401(k) account with your previous employer, you may have several different 401(k) accounts to try and keep track of. You may have even forgotten about some of the accounts that are decades old. By rolling over your 401(k) accounts into one IRA, you can keep better track of your retirement planning progress. You can also keep from losing touch with your plan administrator or your former employer if you roll 401(k) funds to an IRA with a financial advisor you plan to maintain a relationship with for years. 

2. More Investment Options

401(k) accounts have limited investment options since the plan administrators handle the investment options on your behalf. However, IRAs can provide you with a vast array of investment strategies. You can also choose different asset types; instead of just a mutual fund with a 401(k), you can invest in stocks, bonds, and exchange-traded funds with an IRA. With an IRA, you may have more flexibility in rebalancing and diversifying your portfolio as you wish.

3. Being Able To Convert To A Roth Account

A 401(k) rollover gives you the chance to utilize a Roth account. If you anticipate for your tax bracket to be higher in retirement than it is currently, a Roth retirement account could be a good option for you. With a Roth account, you will use after-tax dollars to contribute to the account so you can withdraw funds tax-free.


A 401(k) rollover into an IRA could be a lucrative opportunity for you to improve your retirement planning outcome. If you are looking for advice on rolling a 401(k) into an IRA, LifeBridge Financial is here to help! Schedule a consultation with us today.