Retirement plan consolidation considerations

If you’ve changed jobs, you may have workplace retirement accounts in multiple locations. You might want to consider rolling your 401(k) funds into an Individual Retirement Account (IRA) or your current employer’s plan. Having one account can make your life simpler. But which one should you choose? 

The best choice is the one that’s right for you

The best choice for you depends on your personal situation, your goals and the investment options, fees and other details of your current employer’s plan. Here’s a quick comparison:

Workplace plan IRA
  • Greater oversight
  • Potentially lower fees
  • Access to loans
  • More investment choices
  • Independence
  • Potential access to your money

Potential advantages of workplace retirement plans

Here are some potential advantages of rolling your accounts into your current workplace plan or leaving your account in your prior workplace plan:

Greater Oversight

Fiduciaries of employer-sponsored plans are responsible for choosing an investment lineup that’s in the best interests of their employees.

Potentially lower fees

Thanks to institutional pricing, investment fees and other expenses in employer-sponsored plans may be lower than those in IRAs. Fee disclosure rules for workplace retirement plans also make it easy to compare the costs against what you’d pay in an IRA.

Access to loans

Workplace retirement plans often allow you to take loans from your savings. Keep in mind that taking a loan from your retirement account can really cut into your progress toward your goals.

Potential advantages of IRAs

Here are some potential advantages of rolling your plan balances into an IRA.

More investment choices

Perhaps you feel limited by your workplace plan’s investment choices and are willing to pay potentially higher fees in exchange for more investment options. Most IRAs have a wider variety of choices than a workplace plan.

independence

Maybe you want some of your retirement savings to be independent of your employer. You can invest in an IRA through financial services groups, like Lincoln Financial, or through a bank.

Potentially greater access to your money

You may take a distribution from your IRA at anytime for any reason. Distributions are subject to normal income tax and potentially a 10% penalty tax prior unless certain conditions apply. The IRS permits IRA account owners to withdraw their funds penalty-free under certain circumstances, such as qualified education expenses or a first-time home purchase. Standard income taxes still apply to these types of withdrawals.

This material is provided by The Lincoln National Life Insurance Company, Fort Wayne, IN, and, in  New York, Lincoln Life & Annuity Company of New York, Syracuse, NY, and their applicable affiliates
(collectively referred to as Lincoln”). This material is intended for general use with the public. Lincoln does not provide  investment advice, and this material is not intended to provide investment advice.  Lincoln has financial interests that are served by the sale of Lincoln programs, products and services.