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Options for moving your 401(k) funds
My employer offers a 401(k) plan, and I participate. My company was recently acquired, and plans to change the mutual fund company that currently manages our 401(K) plan. I prefer the current mutual fund company because I have another 401k plan with them from a previous employer, can I move funds between the different 401(k) plans?
Based on my interpretation of your question, it sounds like you would prefer to move your funds in your current employer's 401(k) plan to your previous employer's 401(k) plan that is managed (or will be managed after the acquisition) by a different fund company.
In general, the ability to move funds between 401(k) plans is dependent upon the provisions of each employer's specific 401(k) plan. It is more common to allow employees the ability to transfer funds into their current employer's plan rather than transferring funds into a former employer's plan. In fact, most employer's have specific provisions in their plan which limit ongoing contributions by former employees and require former employees to withdraw, transfer, or distribute their 401(k) funds after they discontinue their employment with their company.
If you prefer to stay with the mutual fund company used by your previous employer, one option would be to rollover your 401(k) funds from your previous employer into an IRA account at your preferred mutual fund company. This would allow you to make ongoing contributions to your IRA and may provide you with a more investments options than your previous employer's plan provided.
In terms of moving your funds in your current employer's plan to your preferred mutual fund company, you should check with your employer about the options allowed under their plan. You may have the option to set up a Self-Direct Account that could allow you to use your preferred mutual fund company or offer you options similar to those offered by your preferred mutual fund company.
As a final note, from an administrative standpoint, it may make sense to consolidate your accounts with a single mutual fund company. However, the fund company that your current employer plans to use may offer you the same or better investment options than those offered by your preferred fund company. In my opinion, the investment options offered to you and the costs associated with those options by each mutual fund company should play a greater role in helping you to decide where to invest your retirement and investment savings.
Based on my interpretation of your question, it sounds like you would prefer to move your funds in your current employer's 401(k) plan to your previous employer's 401(k) plan that is managed (or will be managed after the acquisition) by a different fund company.
In general, the ability to move funds between 401(k) plans is dependent upon the provisions of each employer's specific 401(k) plan. It is more common to allow employees the ability to transfer funds into their current employer's plan rather than transferring funds into a former employer's plan. In fact, most employer's have specific provisions in their plan which limit ongoing contributions by former employees and require former employees to withdraw, transfer, or distribute their 401(k) funds after they discontinue their employment with their company.
If you prefer to stay with the mutual fund company used by your previous employer, one option would be to rollover your 401(k) funds from your previous employer into an IRA account at your preferred mutual fund company. This would allow you to make ongoing contributions to your IRA and may provide you with a more investments options than your previous employer's plan provided.
In terms of moving your funds in your current employer's plan to your preferred mutual fund company, you should check with your employer about the options allowed under their plan. You may have the option to set up a Self-Direct Account that could allow you to use your preferred mutual fund company or offer you options similar to those offered by your preferred mutual fund company.
As a final note, from an administrative standpoint, it may make sense to consolidate your accounts with a single mutual fund company. However, the fund company that your current employer plans to use may offer you the same or better investment options than those offered by your preferred fund company. In my opinion, the investment options offered to you and the costs associated with those options by each mutual fund company should play a greater role in helping you to decide where to invest your retirement and investment savings.
ABOUT MANAGING YOUR MONEY
Local finance professionals share insights and advice on issues such as
budgeting, managing debt, and retirement planning.
About the contributors
Andrew Chan is the
founder of Integrative
Financial Advisors in Framingham. He provides comprehensive
financial planning advice and investment management services. He has
been an adviser for over 12 years and works with clients to integrate
all aspects of their finances including investments, retirement,
education funding, and tax planning.
Cheryl Costa is a principal at Forteris Wealth Management which is an independent, fee-only firm with offices in Framingham and Purchase, NY. She advises clients on investing, education funding, taxes and retirement planning. She has a BS from Worcester Polytechnic Institute and an MBA from Boston University and she is a Certified Financial Planner.
Jamie Downey has been an
accountant for more than 14 years. He's a partner at Downey & Co. in
Braintree. Prior to joining the firm, he served as a manager in the
audit department of accounting firm KPMG.
