Rogue retirement account? Expert advice to reduce rollover stress

(BPT) - It's happened to almost everyone: you leave a job and have a retirement account that you are no longer actively contributing to. It sits there for months - maybe years - because you're not sure exactly where to move it or what the process is like to roll it over. You know that money could probably be better invested, but moving accounts is intimidating, so it sits.

"It's common for people to be nervous about transferring retirement accounts like IRAs and 401(k)s," says Nick Holeman, a financial planning expert at "Moving accounts shouldn't be something you fear or put off because you think it's too complicated."

Holeman says three main causes for concern are potential taxes, excessive fees and process complexity. However, these concerns are often based on misconceptions, and he wants to set the record straight to empower investors to take control of rogue retirement accounts.

Potential taxes

Many people worry about potential tax concerns when moving retirement accounts. They've heard about the high penalties for early withdrawal and figure the best way to avoid them is to let the account be.

"A rollover is not equivalent to a withdrawal," says Holeman. "When you transfer retirement accounts through the appropriate processes, you're still keeping it in the same categorization. It just now lives in a different place."

A rollover can also help facilitate better control of your money. For example, if you roll over an old 401(k) into an IRA account, you are no longer limited to the investment options selected by your employer. This freedom of choice can help you make more customized investment decisions based on your personal goals. Of course, it's important to remember that investing in securities always involves risk and there is the potential to lose money.

Possible fees

A rollover means closing an old account and opening a new account. This process can incur fees that will be unique to each provider. Many people worry about the potential cost, which causes them to leave accounts untouched.

"Research account closing fees but be sure to keep in mind the big picture," Holeman says. "It's like ripping off a bandage. For example, a one-time $20 closing fee is better than a $100 annual fee that could be reduced when you move your account."

Holeman's advice: always know what fees you're paying. Before selecting a new financial organization for your retirement savings, research fees and consider selecting a new account with no trading costs, commission fees, or rebalancing fees. For example, Betterment's Digital plan charges just 0.25 percent per year and that covers goal-based financial advice, tax-efficient investing, automatic rebalancing, and other smart features that help you keep more of your money.


"People tend to treat rolling over a retirement account like going to the dentist," Holeman says. "It's important but usually not urgent, so people tend to put it off."

What's more, people are intimidated by all the paperwork, lengthy forms and seemingly complex steps, so they delay rollovers. Holeman says moving accounts is typically easier than most people think, and in fact, after the process is complete, many people regret not doing it sooner.

"Often, moving retirement accounts can be done completely online thanks to advanced technology," says Holeman. "Betterment offers a '60 second rollover' for certain accounts from supported companies, and there's someone available to help should you have any questions. Moving accounts is typically easier than people imagine."

You should carefully consider whether a rollover is right for your own personal situation, including the specific fees and services associated with your 401(k). Visit to learn more about factors you should consider when deciding whether a rollover might be right for you.

Betterment LLC distributed this article through Brandpoint.

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