401k – IRA Rollover
I have a 401k under $5000 from an employer I left in 1998. I never rolled it and they never sent me a check. I understand that everyone advises to roll this over to an IRA but I am reluctant. My funds earned a 17% rate of return in 2007 and has been a pretty decent earner overall. Is it okay for me to leave this alone??
Permalink Submitted by Alan Spross on Sat, 2008-03-22 02:49
You can leave it with the employer if you wish. The downsides of doing that are:
1) You might lose track of it if the employer gets bought out, or if you have several of these former accounts to keep track of.
2) In a traditional IRA, you may have better investment options and/or could use the extra balance toward eliminating any small account fees if you already have an IRA.
3) You may have broader beneficiary options in an IRA.
4) If anything happens to you, your beneficiary may have better distribution options if the funds were in an IRA.
Of course, they might opt to distribute it to you at any point when the balance is under 5,000.