05/2017 KIPLINGER’S PERSONAL FINANCE 39JEFF NELSON
pany Institute. To see how
your plan compares with
other employer-sponsored
plans, check out www
.brightscope.com.You have a trail of 401(k)
accounts. If you’ve changed
jobs frequently—younger
baby boomers switch jobs
an average of 12 times dur-
ing their careers, according
to the Bureau of Labor Sta-
tistics—leaving your plan
behind could result in a
mishmash of overlapping
funds that may not suit your
age and tolerance for risk.
In that case, it can make
sense to consolidate all ofyour old 401(k) plans in an
IRA. Another option is to
roll 401(k) accounts from
former employers into your
current employer’s plan,
assuming that’s permitted.You need more bond funds.
Although most 401(k) plans
have a solid lineup of stock
funds, they’re often much
weaker when it comes to
fixed-income options, says
Melissa Brennan, a certified
financial planner in Dallas.
In many cases, says Bren-
nan, choices are limited to a
money market fund, a bond
index fund and an actively
managed bond fund. Mostplan trustees are focused
on encouraging participants
to accumulate as much as
they can—which typically
involves investing in stocks.
As you get close to retire-
ment, though, you’ll proba-
bly want to shift to a less-
aggressive mix of invest-
ments. Rolling your money
into an IRA will provide
you with a smorgasbord of
fixed-income options, from
international bond funds
to certificates of deposit.You want flexibility for with-
drawals. About two-thirds
of large 401(k) plans allow
retired plan participantsto take withdrawals in
regularly scheduled install-
ments—monthly or quar-
terly, for example—and
about the same percentage
allow retirees to take with-
drawals whenever they
want, according to the Plan
Sponsor Council of Amer-
ica, a trade group. But other
plans still have an “all or
nothing” requirement: You
either leave your money in
the plan or withdraw the
entire amount. In that case,
rolling your money into an
IRA will enable you to man-
age your withdrawals and
taxes you’ll pay on them.
Even if your 401(k) plan
allows regular withdrawals,
an IRA could offer more
f lexibility. Many 401(k)
plan administrators don’t
let you specify which in-
vestments to sell; instead,
they take an equal amount
out of each of your invest-
ments, says Kristin Sulli-
van, a certified financial
planner in Denver. With
an IRA, you can direct the
provider to take the entire
amount out of a specific
fund and leave the rest
of your money to continue
to grow.STICK WITH THE 401(K)?
In addition to lower costs,
many 401(k) plans offer
stable-value funds, a low-
risk option you can’t get
outside of an employer-
sponsored plan. With re-
cent yields averaging about
1.8%, stable-value funds
provide an attractive alter-
native to money market
funds. And unlike bond
funds, they won’t get pul-
verized if interest rates rise.
Other good reasons to leave
your money behind:■ TO KEEP THINGS
SIMPLE, AMY THOMAS
CONSOLIDATED THREE
401(K) PLANS IN AN IRA.