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Why should I consolidate 401(k) balances?

| MoneyRates.com Senior Financial Analyst, CFA
min read


Considering your options, there are three ways you can avoid tax consequences when leaving an employer's 401(k) plan: You can leave your balance in the prior employer's plan (if permitted); you can roll it into your new employer's 401(k) plan; or you can roll it into an IRA.

There is a strong argument to be made for rolling into the new employer's 401(k) plan. This may allow you to consolidate your existing 401(k) balance with future contributions. That consolidation might allow you to take a coordinated approach to asset allocation, retirement planning, and investment-performance monitoring.

Learn more: 3 reasons why automatic 401(k) enrollment may not be enough for retirement saving

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