Written By Meagan McGuire, CFP®, ChFC®, CSLP®
Updated on October 2, 2025
Maybe you changed jobs for a better role, a bigger paycheck, or to finally be settled somewhere that values your effort. But somewhere in the shuffle of onboarding and adapting to a new work culture, there’s one major thing that got overlooked: your old 401(k).
It’s surprisingly common for people to leave retirement accounts sitting idle with past employers. Sometimes it’s a large balance, sometimes just a few thousand dollars. Either way, ignoring those accounts can cost you — from unnecessary fees to mismatched investments to straight up forgotten money.
What’s the smarter move for an old 401(k)? Roll it over to your current 401(k) or an IRA, so your retirement stays organized and working for you.
It’s easier to forget about a retirement account than you think
This might sound careless, but it’s pretty easy to forget about a retirement account floating around out there. The situation happens more often than you expect, even to financial professionals.
Take Travis Hornsby, CEO of SLP Wealth and our fearless leader, as an example. Years ago, he was tracking his finances with Mint. When it shut down, he switched to another tool, but not all of his accounts made it over. One of his bank accounts with a balance of a few thousand dollars slipped through the cracks.
Then the bank went out of business and mailed a check with the remaining balance to the old address they had on file. So, the money never made it to him. Eventually, the state tracked Travis down and told him he had unclaimed property. At first, he thought it was a scam. But after visiting his state’s official website for unclaimed property, he realized it was real.
If Travis can lose track of a few thousand dollars in a bank account, imagine how easy it is to forget an old 401(k) from a job years ago. Unlike a simple checking account, a forgotten retirement account might be stuck in investments that no longer fit your goals, quietly racking up unnecessary fees. And worse, if something happens to you, it could end up buried in unclaimed property records your family may never see.
Financial tip: Check your state’s unclaimed property website periodically. Unclaimed property can range from retirement accounts to utility deposits to overpayments on insurance and other bills. But be warned, processing times can vary. One of our team members filed in Oregon and was told the average wait time is seven months. All the more reason to stay organized and avoid losing track of old retirement accounts.
Why you don’t want to leave a 401(k) with your old employer
There are several big risks to leaving money behind in a former employer’s plan, including:
- Tracking down old accounts isn’t always easy. If you’ve job-hopped over the years, recalling every employer that offered a retirement plan isn’t exactly top of mind. Plus, plan custodians change and company benefits get restructured regularly. You might have left your account at Fidelity, but years later, your old employer moved it to Vanguard. If you didn’t update your contact information, you’d have no idea where to look, and the old custodian likely won’t be able to help you. That can mean calling up previous employers just to hunt down your own money, which is the definition of awkward and time-consuming.
- The fees can add up. 401(k) plans have administrative fees to maintain accounts. Having multiple old accounts across several jobs, each charging their own administrative fees can nickel-and-dime your retirement balance every year. Consolidating into one account reduces duplicate costs and keeps more money growing for your retirement.
- Investment choices can drift away from your goals. Risk tolerance and goals change over time. If you’re not monitoring an old 401(k), you might be stuck in investments that no longer make sense. Ten years later, it could be too aggressive or too conservative, throwing off your retirement trajectory.
A forgotten or idle 401(k) is a loose thread in your overall retirement plan. It can translate to extra fees, extra phone calls and extra stress for you or your loved ones if they’re ever left to track it all down.
The best options for old 401(k)s
What should you do with an old 401(k)? It depends on what’s available based on your employment.
Option 1: Roll your old 401(k) into your current 401(k)
If your new employer’s plan has solid investment options and reasonable fees, rolling it over into your new 401(k) or 403(b) plan is usually the best move. Everything stays in one place, making it easier to manage and track.
Plus, if you’re doing backdoor Roth IRA contributions, keeping old 401(k) funds inside another employer plan avoids creating tax complications with the IRS pro rata rule (more on that in a moment).
Option 2: Roll it into an IRA
Rolling your old 401(k) into a traditional IRA helps keep the tax status the same (pre-tax to pre-tax) and can give you more control of your funds. You can choose your investments, often with broader and lower-cost fund options than what’s in an employer plan.
But here’s the catch: if you earn too much to contribute directly to a Roth IRA, you may be using the backdoor Roth strategy. This strategy involves making a non-deductible contribution to a traditional IRA and then completing a Roth conversion. Note the IRS doesn’t just look at the single contribution. Instead, they look at all your pre-tax IRA money when calculating how much of the conversion is taxable. This is known as the pro rata rule, and many people aren’t aware of it.
If you roll an old 401(k) into an IRA, it inflates your pre-tax IRA balance and can make a portion of every backdoor Roth conversion taxable. For high earners who plan to use backdoor Roths, this is a major downside. In which case, rolling the funds into your current 401(k) is usually the safer bet.
However, if you don’t do backdoor Roths (or don’t expect to), then an IRA could be a fine home for your old 401(k). The key is knowing the trade-offs before you make the move.
Alternative option: Set up a solo 401(k) if you have self-employment income
If you’re a contractor or have self-employment income, a solo 401(k) can be a powerful tool to maximize your old 401(k) and future retirement savings. It functions like a regular 401(k) and helps to avoid the pro rata issue. Plus, you can contribute both as the employee and the employer. That means much higher contribution limits than an IRA and another tax-advantaged bucket to fast-track your retirement savings.
When should you leave an old 401(k) alone?
There are a couple of scenarios where it can make sense to keep your money in an old retirement plan, such as:
- You’re between jobs. If you’re waiting to see your new employer’s plan, it’s fine to leave the money temporarily where it is. Just document the account and monitor the investments until you’re ready to move the account.
- You’re doing backdoor Roths and you don’t like the new employer’s 401(k) plan. In this case, leaving money in the old plan may be better than creating a new pro rata issue by rolling it into an IRA. Be sure to keep your contact information and investment allocation updated. You can always reevaluate and move the funds later if you get a better option.
If you decide to leave an old 401(k) in place for now, treat it as a temporary solution and make a plan to revisit it.
The value of having a financial planner to help
Tracking down old 401(k)s isn’t glamorous, and it can be quite time-consuming. But it’s an important piece of financial housekeeping. The longer you let accounts sit idle, the greater the chance of losing track, paying unnecessary fees or leaving a mess for your family to figure out.
This is where a financial planner can add real value. At SLP Wealth, we help clients:
- Locate and consolidate old accounts.
- Weigh whether to roll into a current plan, an IRA or a solo 401(k) if eligible.
- Avoid tax pitfalls like the pro rata rule when doing backdoor Roths.
- Align all retirement accounts with your long-term goals.
- Navigate unique retirement, student loan repayment and tax challenges with specialty-specific fiduciary advice.
Your retirement shouldn’t be scattered across half a dozen forgotten accounts. Let us help you get organized and make sure your money is working as hard as you are.
