New federal rules affect financial advisers who move 401(k)s to IRAs

August 15, 2021
According to a report by Financial Engines, American employees are missing out on an average $1,336 every year because they are not saving enough for their company's 401(k) match, and not getting potentially "free money" back for meeting the match. © (courtesy)

If you have amassed a large or even small fortune in your 401(k) retirement plan at work, an important decision eventually awaits: What should you do with the money when you retire or otherwise leave the company?

One quandary is whether to keep the money in the company retirement plan (if that option is available) or roll it into an Individual Retirement Account to maintain your tax-sheltered status for a while longer.

It’s obviously a key issue for those heading into retirement but it also affects a lot of younger people who voluntarily leave for various reasons. They, too, face 401(k) rollover decisions.

Reflecting the magnitude of this decision, the U.S. Department of Labor, which oversees many types of retirement plans, has issued new rules that affect financial advisers and their clients. The regulations are complex and largely beyond the scope of this column. But they focus on potential conflicts of interest and what obligations your adviser owes you to help make a wise choice.