Is it better for a retired person to stay in a company sponsored 401K or roll it over to a traditional IRA?

Answer 1

Generally speaking, you're better off doing a rollover, simply because you can direct your own investments. Typically, 401(k) plans have some pretty high investment expenses. Unfortunately, you can't see how bad the fees really are because it all gets buried into the account.

If you have a large sum, I suggest you talk to a financial planner (CFP). This is your retirement money, after all. It would be an hour well spent.

Answer 2

Depends...If your company sponsored plans have fees that exceed 1.5% then I would say roll it over. Retirement plan expenses are falling....and thanks to Elliot Spitzer the fees are becoming more transparent.

The only people that 100% for sure should roll into an IRA are those that are going to take advantage of 72(t) but it's only applicable if you're under age 55 and retiring. For everyone else it should be investigated and the funds compared.

Take into consideration expense ratios, loads, 12(b)(1) fees, and the ability to invest in multiple fund families. To me it makes no sense to transfer to an IRA and expose yourself to loads and possibly higher expense ratios because someone said 401(k)'s traditionally have higher fees. That doesn't mean that YOUR'S has higher fees so you need to do your research. My 401k has no loads and average expense ratio is .4%. And, recordkeeping fees are about .32%. So total 401k fees are about .75%. I simply can't get that in an IRA with the fund diversification that I have in my 401k. Yours may be different...check it out