401(k) confusion or IRA consolidation?

Stick figure holding a piece of a puzzle

Earlier this month, reports were released by congressional auditors stating that consumers are increasingly confused about complex regulations surrounding their 401(k) accounts. While there are a number of intricate elements to consider as employees fund these retirement vehicles (fees, yearly contribution limits, etc.), an overwhelming uncertainty we see at Fort Pitt Capital is what to do with 401(k) accounts when employees switch jobs. 

On April 3, I was included in a Pittsburgh Post-Gazette article outlining strategies for rolling old accounts into a current employer plan or an IRA. The piece, titled “One nest is best: Consolidating 401(k) and IRA accounts recommended,” reviews an uptick in people with multiple retirement accounts, all of which may be counterintuitive, given the accounts may not work together over the long-term.

In an excerpt from the article I explain, “When people have a number of assets in different accounts, it can make managing their retirement portfolio difficult, regardless of how experienced they are as investors. They also can end up neglecting the wealth they are working to build, the very thing they are counting on to support them when they retire.”

What investors need to do is to consolidate their holdings so they can manage them — and even more importantly, establish a strategy based on their current needs and goals and the market today, rather than one that reflects their past views or an old plan’s limited investment options. A consolidated IRA gives investors a unique opportunity to create a truly tailored strategy using the most attractive investments from an almost limitless range of options.