Hot take: rolling old 401(k)s into IRAs is worth a small fee to avoid forgotten money
I keep seeing people finding an old 401(k) years later. If you are not actively using a previous employer plan, roll it over to a rollover IRA as soon as you can, even if the destination account charges a small maintenance fee or you lose access to some tiny institutional fund.
I am the kind of person who will spend an hour organizing a streaming library or a Sims save folder because clutter stresses me out. Accounts bug me the same way. Letting old plans pile up is more than a "oops I forgot" problem. It also leads to:
- Mail and paperwork going to the wrong address, so checks get sent to old places or accounts sit in limbo.
- Surprise plan rule changes, forced cash outs for small balances, or rollovers you did not expect.
- More logins, more statements, and more chances to miss something important.
Sure, there are times to keep a 401(k) around: ERISA protections, backdoor Roth strategies, or better institutional share classes can matter. But for a typical W-2 worker without complicated tax planning, the simplicity of having one consolidated account is a real benefit.
Am I missing any major situations where rolling an old 401(k) into a rollover IRA is a bad idea for a typical middle income person? If you recommend leaving it, what balance or situation makes it worth one more account to track?