Since its inception nearly 40 years ago, the 401(k) has become one of the most commonly used retirement savings vehicles. It’s popular with employers because it relieves them of the burden of funding a pension. The 401(k) plan is popular with employees because it usually offers a broad range of investment options, tax-deferred growth and employer matching contributions.

While a 401(k) can be a powerful retirement accumulation tool, it can also be complex to manage, especially after you leave your employer. Many workers leave their 401(k) balances in their former employer’s plan after they leave. They may feel that’s their best option, or they may forget about the balance altogether.

However, many employers have decided they aren’t going to keep former employee balances in the plan forever. Many companies have adopted a policy known as “forced rollover.” Under a forced rollover, your balance is automatically rolled out of the plan and into an IRA. Most plans only enforce this type of rollover for balances under a certain threshold.

If your balance is forced into an IRA, it won’t trigger taxes or penalties. However, your funds will likely be invested in low-risk funds such as a money market. These investments may not offer the kind of growth you need to fund your retirement. If you aren’t aware that the balance exists or that it’s been rolled out of the plan, you may not be able to make changes to your allocation.

Do you have a 401(k) balance in a former employer’s plan? Are you vulnerable to a forced rollover? If so, below are a few tips to help you take control of your retirement assets and implement the correct strategy:


Collect statements for all outstanding accounts.

If you’ve changed jobs multiple times in your career, it’s possible that you have outstanding balances in former employer plans. You may want to start by contacting the human resources or benefits department at your former employer. They can likely either tell you if you have an outstanding balance or direct you to the right sources.

Before taking action, collect statements from all outstanding plans. For simplification purposes, you may want to roll your outstanding balances into one IRA. That way, you only have to manage one account, not several different balances and strategies.


Roll over your vested balances.

You have two rollover options available. You likely can roll your old 401(k) balances into your current employer’s plan. You may find this easier from a management perspective, as all of your 401(k) funds are then in one location. However, your 401(k) may have limited investment options.

Another option is to roll your old balances into an IRA. An IRA gives you the ability to choose from a wide range of investment options. You can choose the allocation that best fits your needs and risk tolerance, and you can better control fees and expenses. Once you roll your balances into an IRA, all of your funds are in one account so you can implement a cohesive strategy.

Ready to take control of your old 401(k) balances? Let’s talk about it. Contact us today at Spicer Wealth. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation.


Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

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