I’ve saved over $600,000 in my 401(k) plan and plan to retire soon. My HR department says I can choose to keep the money in the 401(k) plan after I retire. What should I do?

Hi Aaron,

Congratulations on saving such a significant amount in your 401(k) plan! Planning for retirement is an important step, and having a substantial savings like yours is commendable. As for whether you should keep the money in your 401(k) plan after you retire, here are a few factors to consider:

1. Investment Options: Evaluate the investment options available in your 401(k) plan. Assess the fees, performance, and diversification opportunities offered by the plan. If you find the investment options to be satisfactory and aligned with your goals, you may choose to keep your money in the plan.

2. Control and Flexibility: Consider whether you value maintaining control and flexibility over your retirement savings. By leaving the money in the 401(k) plan, you’ll have limited control over investment decisions and withdrawals. If you prefer more control, you may want to explore other options.

3. Rollover to an IRA: Another option is to roll over your 401(k) funds into an Individual Retirement Account (IRA). IRAs often offer a broader range of investment options compared to 401(k) plans. It allows you to select investments that align more closely with your retirement objectives and provides more control over your funds.

4. Fees and Expenses: Compare the fees and expenses associated with your 401(k) plan and an IRA. Some 401(k) plans have high administrative fees, which may be a consideration when deciding whether to keep the money in the plan. IRAs often offer more competitive fee structures.

5. Estate Planning: If estate planning is important to you, you may want to consider how the distribution of your assets would work under each scenario. Some options, like rolling over to an IRA, may provide more flexibility for passing on wealth to beneficiaries.

It’s essential to consult with a financial advisor or retirement planning professional who can review your specific situation and provide personalized advice based on your goals, risk tolerance, and financial needs. They can help you navigate the pros and cons of keeping your money in your 401(k) plan versus exploring other options like an IRA.

If you have further questions, please feel free to schedule an introductory call with me by clicking here.

Hope this helps!

Best,

Zack Swad, CFP®, CWS®, BFA™, AWMA®, AAMS®
President & Wealth Manager, Swad Wealth Management, LLC
Tel: 707-899-1010
www.swadwealth.com
100 Stony Point Rd, Suite 244, Santa Rosa, CA 95401