Millions of workers contribute to a 401(k) plan so they can have more money when they retire \u2014 and then sometimes, when they get to that point in their lives, they don\u2019t touch those accounts for another few years. <\/p>\n
More than half of workers \u2014 55% \u2014 are choosing to leave their assets in their former employer\u2019s 401(k) plan a year into retirement, according to Fidelity data of its workplace retirement accounts. Four years ago, that figure was 45%. They may be doing so because their 401(k) plans have low-cost fees or they want to stay with the same administrators and managers of the plan (in this case, Fidelity and their former employers), said Dave Gray, head of workplace retirement offerings and platforms. <\/p>\n
Some retirees may also not be sure what to do with that money, such as rolling it over into another account or consolidating all of their 401(k) plans. <\/p>\n
See: <\/strong> What are the odds the market will crash during your retirement years?<\/a> <\/p>\n Like with most financial planning, the decision to keep 401(k) assets in a former employer\u2019s plan or roll it over into an individual retirement plan or other investment vehicle is a personal one. Participants must consider fees tacked on to any account they choose, as well as investment options available in those plans (not all 401(k) plans have the same fund choices, which may make one more favorable than the other). <\/p>\n People shouldn\u2019t roll over an account or consolidate just to do so, but after reviewing costs and features, it might make sense, said Patrick Beagle, managing owner of WealthCrest Financial Services in Springfield, Va. \u201cI see clients all the time that have several plans,\u201d he said. \u201cIf they intend to work past 70, I strongly urge them to stay in a 401(k), and consolidate all the old into the new so they can defer distribution on the whole lot.\u201d <\/p>\n Retirees should review alternatives, such as individual retirement accounts, which offer more investment choices than 401(k) plans do, said Glenn Downing, founder and principal of CameronDowning in Miami. \u201c401(k) plans are great accumulation vehicles, but can be cumbersome for distributions,\u201d he said. It\u2019s important to analyze not just the number of funds available, but the quality of those funds as well. <\/p>\n Some retirees may not touch their 401(k) plans because they don\u2019t need the money yet. Wealthier clients avoid withdrawing from 401(k) plans until they\u2019re 70 1\/2 years old, which is around the time they must withdraw required minimum distributions<\/a> (or face a penalty of 50% of whatever amount they were supposed to withdraw). <\/p>\n Also see: <\/strong> How to figure out when to claim Social Security<\/a> <\/p>\n