What happens to my 401(k) or 403(b) when my employer changes?

When you leave an employer, or your employer is bought or merges with another company – or goes out of business, you typically need to decide what to do with your old 401(k) or 403(b) retirement account.

That’s not terribly uncommon. Recently, right here in East Texas, we have seen major changes within the medical community which affect retirement accounts for thousands of families who are our friends and neighbors. Even if they work in the same building with the same coworkers, they may technically have a “new” employer. And for many younger workers today, frequent job changes are not unusual or even frowned upon. It could even be recommended as a “best practice” they should follow.

So, what to do with your old retirement accounts?

You can always choose to do nothing.

You won’t be able to make any more contributions into existing accounts because you no longer work for those employers. And, of course, if you had any matching employer contributions those will no longer be made on your behalf.

But you could always leave your retirement accounts wherever they exist with each new employer – and end up with a number of separate retirement accounts by the end of your working career.

However, as we age and our life circumstances change – and especially as we begin to approach retirement, our financial needs change. We may need to make adjustments when we have children, or when they go to college, or when we buy a house. We certainly need to adjust for less risk and more ‘wealth preservation’ as we near the end of our earning years.  If you “rollover” your old retirement accounts into a single IRA, you only need to make that transition from “more risky with more growth” to “less risky with less growth” for one account. If you have multiple accounts to handle, that just makes it more likely you’ll forget about some of them and your funds won’t be properly positioned as you move into each new stage of life.

On the other hand, you can “rollover” your existing retirement account(s) into a new IRA.

That solves our previous issue – only having a single account makes it much simpler to adjust your finances to meet your current needs as you move through the various stages of life and retirement.

In addition, moving from a 401(k) or 403(b) into an IRA typically opens up a large number of additional investment options.

With most 401(k) or 403(b) retirement plans, you only have a limited number of funds into which you may invest. With an IRA, you are able to invest in a seemingly limitless variety of funds – as well as specific bonds or stocks. If you believe you know the next “Google/Alphabet” or “Apple” and want to invest directly into that specific publicly-traded company, you can.

Maybe you think company A’s S&P 500 fund is better than company B’s – or that company B’s international fund suits your investment style or supports the things which are important to you better than company C’s international fund. With a 401(k) or 403(b), you usually only have one of each type of fund you may select to hold your money. But with an IRA, you can mix-and-match to your heart’s content.

All those new options might be confusing, but a financial professional can handle that on your behalf. Having all those options just provides that professional with a larger selection of tools she or he can use to customize your investments and produce exactly the retirement you need and want.

For example, James Holloway, Sr. and the other financial professionals at Texas Financial and Retirement here in Tyler are ready to assist you and evaluate your current and desired financial position. They can help you wade through the options – not only which stocks, bonds and funds to select, but also whether to move into a Traditional IRA, a ROTH IRA or both. And they can help you create a financial plan which allows you to maximize your retirement benefits by transitioning into the right investments at the right times in your life.

You can even choose to get a guaranteed return.

Currently, Texas Financial and Retirement is offering a guaranteed 3.60% rate of return for five years as part of a limited time offer. If you’re nearing retirement or ready to begin your retirement years, that might be just what you need – guaranteed growth for several years, without worrying about market downturns or crashes.

Contact James and the rest of the Texas Financial and Retirement team at bestclients@texasfinancialandretirement.com or by calling (903)534-5477 to schedule an appointment and see how they can help you arrive at and maintain a good retirement – with a plan customized for what is important to you.