According to career website Zippia, the average person changes jobs 12 times during their lifetime. Now, imagine if you had 401(k) accounts with each of your employers! Does it make sense to consolidate your retirement accounts? Like many issues, the answer is, “It depends.” Here are some pros and cons to consider before rolling all your retirement accounts into one:


  • Convenience: Consolidating multiple retirement accounts can make it easier to manage your investments and keep track of your retirement savings. With one account, you’ll have a clear picture of your investments and can make adjustments to your portfolio more easily.
  • Reduced fees: By consolidating your retirement accounts, you may be able to reduce the fees you pay for investment management and account maintenance. This can help you save money over the long term.
  • Improved fund choices: If you have retirement accounts with limited investment options, consolidating them into one account may give you access to a wider range of investment funds.
  • Easier beneficiary management: With multiple retirement accounts, it can be difficult to manage your beneficiaries. By consolidating your accounts, you can ensure that your beneficiaries are up-to-date and easily managed.

If you are considering rolling your past 401(k) or 401(k)s into your current employer’s plan, check with your employer first to see whether your plan allows for incoming rollovers. You should be able to obtain a copy of your employer’s Summary Plan Document, which explains eligibility requirements. If you are unable to roll over your past 401(k)s to your current employer, you might consider rolling them into an IRA, but compare investment options, fees, tax implications, and other factors to determine if a traditional or Roth IRA is right for you.


  • Potential tax consequences: Depending on the type of retirement accounts you have and the way in which you consolidate them, there may be tax consequences. It’s important to understand the tax implications of consolidation before making a decision.
  • Higher fees: While consolidating your accounts can reduce fees, it’s also possible that consolidation may result in higher fees, particularly if you choose to consolidate into an account with higher management fees.
  • A potential loss of benefits: Moving money from a previous employer’s retirement plan may result in a loss of grandfathered benefits, such as the ability to work with certain custodians.
  • Limited investment options: While consolidating your accounts can give you access to a wider range of investment options, it’s also possible that the account you choose to consolidate into may have limited investment options.

Timing is also an important consideration when determining whether to consolidate. If you plan on retiring soon, consolidation may seem like a more practical way to be able to track your investments. But the age at which you plan to retire makes a difference as well. If you plan to retire at 59 ½, you can expect to pay a penalty unless you qualify for the “Rule of 55,” which enables employees who are 55 and older to make withdrawals from their employer-sponsored retirement accounts without paying a penalty if they leave their jobs.

Finally, it may make sense to consolidate your accounts if you have several with small amounts or have concerns about whether your previous employer will remain in business. If your accounts have less than $5,000 in them and you have not actively maintained them, they may be turned over to the state as unclaimed – a process known as “escheatment.”

Ask Your Advisor for Help

Depending on your personal situation, consolidating your retirement accounts now may or may not make sense. Your financial advisor can help you compare certain factors, such as how your investments in previous accounts match your risk tolerance now and whether you are duplicating certain funds or fund types.

Planning for retirement shouldn’t be a “set it and forget it” process. Getting assistance from a financial professional can help you get on a consistent path and maximize the best options for growing your nest egg.

Download Savant’s 401(k) Rollover Checklist

One of the most important decisions to make when you are retiring or changing jobs is what action to take with your 401(k), 403(b), or any other employer-sponsored retirement plans. There are several options to consider including leaving your account in your former employer’s plan, transferring it to your new employer’s plan, taking a cash distribution, or rolling it into an IRA. This checklist will walk you through your options and the process of rolling over your retirement account.

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