Change jobs, get poor 401(k) help

  @Money June 14, 2013: 5:34 PM ET
401k help

New job? Take your 401(k) provider's rollover advice with a grain of salt.

(Money Magazine)

The 401(k) provider at your next workplace may not give you the best advice on rollovers, judging from a recent report by the Government Accountability Office.

New hires are often steered toward moving their old 401(k) into an IRA at the company managing their new employer's plan, the GAO found, and are given information that is inaccurate, vague, or confusing.

When a GAO researcher posed as a job-changer seeking help with his 401(k), 12 out of 30 401(k) call center representatives raised doubts about his ability to roll money from his old 401(k) into a new plan. And inefficient or complex procedures make it much harder to roll an old 401(k) into a new one than it is to move the money into an IRA.

Related: Plan providers misleading savers

Your best option depends chiefly on the costs of your old and new 401(k)s. (You can keep the money from your old job where it is, usually, if you have more than $5,000 in that plan.)

Average expenses at large company 401(k)s are a hard-to-beat 0.36% of assets, investing data firm BrightScope found last year.

Watch: Here's how to roll over your 401(k)

On the other hand, an IRA may give you wider choices, says CPA Ed Slott of Rockville Centre, N.Y. To top of page

Send a letter to the editor about this story to money_letters@moneymail.com.


The push into IRAs
New employees wanting to rollover an existing 401(k) into their employer's new plan get slanted advice, a government investigator found.
Transferring funds to an IRA Transferring funds to a 401(k)
Percentage of reps offering to help 33% 3%
Rep's typical estimate of rollover speed "No wait" "Weeks or months"
Source: GAO
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