Expert: Paul Henneman - 7/6/2007

Question
I am 30 recently switched employers.  I have a 401k from my prior employer worth about 34k.  I will be taking part in my new employers 401k when I'm eligible next month.  I have the ability to leave my current 401k w/my prior employer's admistrator indefinitely (well, until I turn 70.5) with very minimal fees (last quarter was $1.30), I just can't make any additional contributions or take any partial withdrawls or take any loans.  OR I can rollover all funds into my new employer's 401k & administrator.  I'm really not sure how to find out the pros/cons of doing either.  Can you advise?  THANK YOU!

Answer
Thank you for your question!
I think really it is a matter of fees versus convenience. I would look into specifically what the fees are for your new 401k plan are. If they are equally low, it may be nice to simply have all of your 401k assets in one place. If the fees are higher, it may be worth it to leave your existing 401k plan where it is.
The only other thing to consider is what your investment options are in each 401k plan. If you are happy with the options you have, and the performance of your old 401k, there is less of an argument to rollover into your new plan. But, if there are limited investment options, and you feel that you can do better with what is offered through the new plan, this would be worthy of consideration.
Also, keep in mind that you can rollover at any time in the future, should you change your mind. The ultimate answer is up to you, when you consider the fees that each 401k charges, the available investments that each 401k offers, and if the convenience of having the entire amount in one plan versus split is of importance to you. Those three factors should lead you to a decision that is right for you.

I hope that this helps, please do not hesitate to follow up with me if I can be of any further service!

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com