I have 3 401ks accounts – one in another country. What are good rules of thumb for when to roll over accounts – and when not to?
The first big thing to think about is fees (and within that, choices).
Second, hassle– effort to change vs. benefit of consolidation
Third, benefits of having a larger balance with some providers (access to lower cost funds)
Fourth, Roth conversions complicate things– if you want to convert a traditional IRA into an IRA Roth, or if you want to fund a “back-door” Roth, then you should keep your 401K as a 401K either with your previous employer or with your new employer. This is because you have to pay taxes on your traditional IRA balance when you make a Roth conversion no matter how much you convert. Of course, if you want that traditional 401K to become a Roth, then rolling over to an IRA and paying taxes makes sense.
Fifth, if you’re planning on early retirement, check to see if your 401K plan allows early withdrawal (such as at age 55), meaning before the IRA age of 59.5.
Personally I prefer making switches when the stock market seems to be behaving itself without huge fluctuations, though this is a matter of personal preference. I just hate the thought of things changing a lot, possibly in a bad way, if there’s a hold-up in the selling/buying that happens when you roll over the 401k.
Never “cash out” the plan if you can help it. If you do roll over your 401k you have a choice between rolling it over to a new employer or rolling it into an IRA.
No idea about the other country 401k– that may have different rules. Talk to a tax person about that.
Standard disclaimer: We are not financial planners and we have no fiduciary responsibility. Talk with a professional or do your own research before making important decisions.