Should I stay or should I go: Your workplace plan after retirement

There are a lot of decisions to make when you retire, but what to do with your retirement account is one you may not want to put off. Paul goes over whether staying in or leaving your company’s retirement plan is right for you.

You’ve worked hard to save for retirement and now you’re ready to take the next step. But after years of working, does it make sense to leave your retirement savings with your employer, even after you’ve left? There are arguments to be made to stay, just as there are reasons to roll over your money into an Individual Retirement Account (IRA).

Before deciding “should I stay or should I go” from your workplace retirement plan, ask yourself the following four questions.

1. What features are most important about my retirement account?

Fees are an important part of the equation for most investors, but access to special services or investments may also be on your priority list. Your workplace savings plan may benefit from special pricing available to larger groups of individuals, so you may end up with higher fees if you leave your plan. At the same time, some investors favor specialized services and a breadth of investment options that are more likely to be available outside of their plan. Try to get the annual and one-time charges in writing so you can compare the 401(k) and IRA fees side-by-side.

2. Does my retirement plan work in my best interest?

The vast majority of workplace savings plans have a fiduciary responsibility to select and monitor investments with your best interest in mind.1 Knowing that someone keeps an eye on fees, performance and suitability is a valuable benefit. The personalized, holistic attention of an investment advisor managing your IRA may also be an attractive option. However, many financial advisors follow a less strict standard in the advice they provide—and in some circumstances may suggest products to you based on the commissions they earn. Be sure to ask any advisor you may be considering how he or she works to protect your interests.

3. Do I know what all my retirement accounts are doing?

Unless you want to keep access to specific investments or services, consolidating retirement plans can make it easier to manage your investments as opposed to maintaining two, three or more different accounts. You may have the option to consolidate your previous retirement accounts with your current company, which could help you monitor and adjust your investments based on your objectives.

4. Do I have a plan for retirement income?

Some workplace retirement plans are designed to help meet your needs even after you retire. It’s important to find out what your plan will do for you, including offering flexible distribution options or retirement calculators to help you understand how much you can spend each month. Alternatively, some IRA accounts may give you greater control over when and how you withdraw retirement spending–and may offer retirement distribution products and services beyond what’s available in your employer plan. There are also regulations as to when you can make withdrawals from different account types. For example, if you are over the age of 55 and no longer working, you can take withdrawals from your 401(k) plan without being subject to a 10% penalty. In an IRA account, you must wait until you are 59½.2

You’ve worked hard to save money for retirement, so it’s important to take the time to ensure you’re on the path that’s right for you. Make sure to reach out your employer or recordkeeper for specific plan details and be ready to ask similar questions about any advisor you are considering.

Paul Mele is the Head of Participant Engagement for BlackRock’s U.S. & Canada Defined Contribution (USDC) Group and a regular contributor to The Blog

1 United States Department of Labor: Retirement Plans and ERISA FAQs

2 United States Government Accountability Office Report to Congressional Requesters, 401(k) Plans: Labor and IRS Could Improve the Rollover Process for Participants

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