Inertia and Your Old 401(k)

My father-in-law always says that inertia is the strongest force in the universe. If the question is “Why is this thing here?”, the answer is usually “Because that’s where it was yesterday.”Take our house, for example. At any given time, there are at least three large boxes full of old clothes, toys and who-knows-what-else sitting in a hallway waiting to be handed down, returned to a friend, or donated to Goodwill. Sometimes they sit there so long we start perceiving them as an essential part of our décor strategy.But then one day, with a burst of inspired energy, we will actually load those boxes into a car and deliver them to wherever they are supposed to go. And then for a few brief days or weeks, our house and hallway seem like Buckingham Palace, with enough room and splendor for a royal wedding. And it just feels… glorious.This reminds me of how a lot of people leave their old 401(k)s lying around for years without even checking on them, much less actively managing them. And I totally understand. When you’re changing jobs, you’ve got a lot on your mind. Jumping through hoops to roll over your 401(k) may not be high on the priority list.But if you do have old 401(k)s lying around, here are seven reasons to motivate:

1. You’ll have more investment options. Your old 401(k) is limited to a set of mutual funds. When you roll over to an IRA you can invest in mutual funds, ETFs, individual stocks, individual bonds, and a plethora of niche holdings.
2. You may have better investment options. With more options comes the possibility of better-performing investments, lower fees, or both.
3. You can consolidate accounts and streamline your strategy. If you’re consolidating multiple 401(k)s, you’ll have all your old accounts in one place and be able to plan strategically.
4. You’ll be more likely to keep an eye on it. With your old 401(k)s now in one place, you’ll be more likely to pay attention to your new consolidated account than to an old 401(k) from four jobs ago.
5. You can take advantage of short-term opportunities. If the market changes you can make adjustments in real time, such as buying stocks when prices drop.
6. You’ll only have one custodian, login, etc. You're much more likely to monitor your accounts if you only have one custodian to go to for customer service and one username and password to worry about.
7. You can customize your accounts. With a rollover IRA, you can tailor your portfolio to serve your needs. Wanna retire early? Set it up to do that. Wanna turbo-charge growth? There you go.

When people describe overcoming the inertia to complete their rollover, I can see the relief and accomplishment on their faces. Their investments are organized, updated, consolidated, and (potentially) better performing. They feel like they just got paid to organize their own closet!So if you’re ready to roll over your old 401(k)s, here’s all you have to do:

1. Open a Rollover IRA account.
2. Call your old 401(k) and request that they process the rollover.
3. Pick your investments.