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The plans with access to institutional funds are the ones by large employers. So when figuring as a percentage of all plan participants, the probably is that the plan will be good. But as a percentage of all plans, most are small employers which are often worse than what you can get on your own.


My point is, most plans are NOT good; this post needs some guidance on how to tell.


Thanks, Steve. As I mentioned in the column, I was writing about large-company plans, which cover the most participants. People have gotten the idea from relentless pitches by financial services companies that they’re always better off in IRAs, which isn’t the case.


Thanks for this; talk about perfect timing! I actually thought you HAD to roll it into an IRA (I guess that’s how I’ve interpreted the ‘relentless pitches’) nd was getting ready to do that with my husband’s 401(k) from his last job, which was for a very large company with a great plan. It’s performing very well…I think I’ll leave it alone.


It may not matter if you are young , under 40. but don’t forget about the penalty free withdrawal age may impact your decision. 401k’s is 55 and ira is 59 1/2.. Having your savings penalty free 4 years sooner may make a difference if you are looking at retiring early


401(k) plan administrators don’t work for free. I believe most charge a small percentage of the assets they’re administering. I’ve never gotten a straight answer on how much.
Until we get full disclosure of fees, in a uniform manner enforced by law, I think moving 401(k) proceeds into an IRA is the way to go, so you control costs…the only aspect of your investments you *can* completely control.


The thing is, even if you have one of those above-average 401(k) plans (or I should say, below average, as in below average cost), the downside is limited. Your 401(k) has to compete against the very best IRA’s. For instance a Vanguard IRA with a 0.20% or less expense ration and maybe $40 in statement fees. There’s just not a lot of room to get cheaper than that. But on the flip side, the expenses in a poor 401(k) can be much worse. 1% in account fees, on top of the funds’ expense ratios, is pretty common for those majority of employers that pass the administration costs on to their employees.

So I would say the rule of thumb is: unless you know for a fact that your 401(k) is a great deal, you are better off rolling it over.