Don’t leave your old 401(k) on autopilot when you change jobs

photo by: mertesb

photo by: mertesb

A recent analysis by Charles Schwab found that 43% of the 401(k) assets held by workers who left their jobs in the first quarter of 2008 still remains in the old plans. Leaving your assets on autopilot in your old employer’s plan may not be the smart thing to do.

Assets left in an old employer’s 401(k) plan are at risk of becoming “out of sight, out of mind”. If you neglect those assets, your overall asset allocation could become out of balance.

Get educated on your options, which typically include a rollover to an IRA, move the assets into your new employers plan, or take a cash distribution (may be subject to penalties).

An IRA rollover offers some potential advantages, especially if your 401(k) fund options are limited. Another factor to consider is the potential to convert your rollover IRA to a Roth IRA. In 2010 the Roth IRA conversion income limits are eliminated.

About the author

Tim Kober, CFP®

Tim Kober is the founding principal of Cedar Financial Advisors, LLC, an independent, fee-only financial planning firm based in Portland, Oregon. Tim specializes in providing Fee-Only financial planning, investment advice, and hourly consulting to individuals and families.

Prior to founding Cedar Financial Advisors, Tim spent 18 years as a Director of Strategic Planning and other Senior Management positions at Intel Corporation. He played a key role in creating and managing several successful businesses and product lines, and was valued as a trusted advisor to executives and as a leader/mentor to his team.

Tim has taken his passion for investing, solving problems and helping others and applied it to personal financial planning. He applies the same strategic thinking, problem solving, organizational, and communications skills that made him highly effective in a corporate setting to help individuals and families define and realize their personal goals.

Recognizing the critical need for fiduciary financial advisors that help clients reach their goals using sound, academically proven investment strategies, Tim established Cedar Financial Advisors, LLC.

Blessed with a wonderful wife and child, Tim loves outdoor activities such as hiking, cycling, alpine skiing, and tennis. In 2007 he rode in Cycle Oregon, an annual six day cycling adventure. He is active volunteer in his community and at his daughter’s school.

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