Managing Your 401k During Career Transitions: A Faithful Approach to Financial Stewardship

As an evangelical Christian, you understand that stewardship of resources is crucial to your faith. This principle extends to managing your financial assets, including those in your 401(k) retirement account. One critical decision you might face during your professional life is how to handle your 401(k) plan when you switch employers. At Family Life Financial Planning, we believe in advising you to make financial decisions that honor God’s provision and align with your family’s goals. Let’s explore the three primary options you have:

• Keeping your 401(k) with your former employer
• Moving it to your new employer
• Transferring it to a Rollover IRA

Keeping the 401(k) at Your Former Employer

There are several advantages to this approach. Firstly, the administrative burden is low. If you’re satisfied with your current plan’s investment choices, fees, and performance, keeping it where it is might make sense. Additionally, some more extensive employer plans offer access to institutional-class funds that may have lower fees than retail-class funds available to individual investors. 

However, there are disadvantages as well. You might have less flexibility with investment choices compared to an IRA. Additionally, you’ll need to manage and keep track of multiple 401(k) accounts if you change jobs frequently, making financial planning more complex.

Moving the 401(k) to Your New Employer

You may consider this option if your new employer’s plan accepts transfers. This has the benefit of consolidation, allowing you to manage your retirement savings in one place. It can simplify tracking your investments and potentially provide access to the same institutional-class funds mentioned earlier.

The downside is that this option might not be available if your new employer’s plan doesn’t accept transfers. Also, you must compare your new employer’s investment options, fees, and performance with your old plan and an IRA to ensure you’re making a wise decision.

Moving Your 401(k) to a Rollover IRA

A Rollover IRA offers you the most flexibility in terms of investment choices. It’s an excellent option if you’re seeking a more comprehensive range of investment opportunities beyond those typically offered in employer-sponsored plans.

This option also allows for better consolidation of your retirement savings if you have multiple old 401(k)s or other retirement accounts. A Rollover IRA gives you control over your investments and simplifies estate planning, especially if your spouse is named beneficiary.

On the downside, Rollover IRAs typically don’t have access to the institutional-class funds that might be available in 401(k) plans. Also, the greater range of investment choices can lead to more complex decision-making.  

A Word On Fees

Our approach is built upon using Exchange Traded Funds (ETFs), which often carry lower fees than traditional mutual funds, including the institutional funds your 401k may offer. We can guide you through the complexity of the investing world, helping you choose appropriate funds and build a diversified portfolio that aligns with your unique financial goals. Our mission is to simplify your journey toward financial peace and security, ensuring you can focus on what truly matters—your family’s well-being and faith. You can also get access to these low-cost investments in many IRAs.

In conclusion, your choice between keeping your 401(k) with your former employer, moving it to your new employer, or rolling it over to an IRA should be based on your circumstances, investment goals, and the specifics of the plans involved. Navigating these choices may seem daunting, but you don’t have to do it alone. We invite you to schedule an appointment with us at Family Life Financial Planning, where we can discuss these options in detail and guide you toward a decision that aligns with your unique needs and goals. Visit us at www.saveforyourfamily.com to schedule your appointment today. 

Remember, our mission is to support you in making financial decisions that secure your future and give you peace of mind during life’s transitions.