What Should I Do With My Old, Orphaned 401(k)s?

Now I have three or four from former companies just sitting around.

What should I do with them?

Long story short: you’ll want to consolidate those accounts and roll them over into an IRA.

At the very least, you’ll be able to keep an eye on them in real time.

Plus, it’s a good opportunity to check and see which funds you’re invested in.

It’s well documented that nearly 80% of professional money managers do not beat the market.

The reason is simple: fees.

Beyond high fee funds, a 401k account through an old employer can now be subject to administration fees.

It’s especially lucrative for banks since most people don’t roll over old 401ks.

Previously mentionedFeeXgives you an easy way to see how much of your savings you’re losing to fees.

Check in on your old funds, and compare it to your current 401(k).

Now it’s time to take action.

IRAs offer additional investment options that 401(k)s do not, and come with lower fees.

The best part: in many cases, you could do this online or on the phone.

From there, you’re in control.

Apple stock, Betterment, Vanguard funds, you name it.

That’s how dramatically you could reduce fees just on the fund end of things.

Roth IRAs also have other benefits like being able to actually withdraw the principal, unlike a 401k.

If that doesn’t convince you, I don’t know what will!

Is it worth the hassle?

I put the question to our group, and got mixed responses.

The simpler, the better.

you’re free to diversify in one place.

Spreading out your accounts over many institutions adds no safety, only complexity.

There are plenty ofmyths that keep us from saving for the future.

Don’t fall prey to them.

Finally, check outour guide to retirement planningto get a headstart once you’re on the right path.

you’ve got the option to follow him on Twitter at@MattGiovanisci.

William Cowie writes over atGet Rich Slowly,Bite the Bullet Investing, andDrop Dead Money.

Greg McBride is the Chief Financial Analyst atBankrate.

All three gentlemen offered their expertise for this article, and we thank them.

Title photo bypjcross(Shutterstock) androdho(Shutterstock).