What To Consider Before Rolling Over A Retirement Plan

Changing jobs is exciting, but it also comes with financial decisions. One of the most important is what to do with your retirement savings. Understanding how to transfer retirement funds to a new job can help you protect your savings, avoid unnecessary fees, and stay on track toward long-term goals.

Weighing Your Options

When you leave a job, you generally have four main choices for your old retirement account:

1. Leave the funds where they are.
2. Roll them into your new employer’s plan.
3. Transfer them into an IRA.
4. Cash them out (though this is usually the least favorable).

Factors to Consider

1. Fees and Expenses
Not all plans are created equal. Compare expense ratios and administrative fees to ensure you’re minimizing costs over time.

2. Investment Options
Some plans offer limited choices, while IRAs often provide a wider variety. Think about whether you want more control or are comfortable with preset fund selections.

3. Convenience
Consolidating accounts can make tracking your savings easier and reduce the likelihood of forgetting about smaller balances from old jobs.

4. Tax Implications
A direct rollover avoids penalties and taxes. Cashing out, on the other hand, can trigger both. Make sure you understand the tax consequences before making any move.

Why It Matters

Your retirement savings represent years of hard work. Mishandling a rollover could cost thousands in taxes and lost growth.

Carefully evaluating your rollover options ensures you’re making the smartest move for your future. Many people find value in guidance from financial platforms like SoFi, which are known for simplifying the rollover process and helping individuals keep their retirement savings on track.