Should I Roll Over My Dormant Traditional 401(k)?

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Updated 12/1/2023

**This guide has been updated to incorporate new changes made by The SECURE Act 2.0 that are effective for the 2024 year. Any SECURE Act 2.0 changes that are effective for 2025 will be incorporated into this guide at the start of the 2025 year.

401(k)s and IRAs have many unique features that may be beneficial to your client, depending on their circumstances. The decision to roll funds out of a former employer’s plan involves more factors than just fees and investment selection.

To help make this analysis easier, we have created the “Should I Roll Over My Dormant Traditional 401(k)?” flowchart. It addresses some of the most common issues that should be considered before doing a rollover, including:

Common IRA and 401(k) features and differences
Net Unrealized Appreciation options
Age-based distribution options
Taxes and penalties in an IRA versus a 401(k)
Availability/existence of loans and the impact of a rollover
Hardship Withdrawals
Substantially Equal Periodic Payments

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