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

1. Problems with 401(k)s. As far as retirement accounts go, these are not my favorites. The main reasons are that there are too many fees and they're limiting as far as what positions you can hold. You also need to make sure you've worked the requisite years to have 100% of matched funds vested, and if your company closes or files bankruptcy before that time, you might lose money by no fault of your own. Because of these factors, and all things being equal, I'd say an IRA is a better choice.

2. Benefit of the employee match. To contradict the above paragraph, if you have an employer matching up to 3 or 5% of your contribution and you have every intention of staying with that company long enough to become entirely vested, that's a nice way to pad your retirement account. If you're able to fund a 401(k) through pre-tax contributions and then still add money to an IRA, even better. It's not free money because you have to stick around to earn it, but for those who do stick around, the payments are very real.

3. What to do when you leave. Finally, back to your question. There's no good reason to leave your 401(k) at your old job, and there's not a particularly good reason to roll it over to your new company. Even if you now have an employer you love with a matching program, you can still take that money while turning the old 401(k) into an IRA with better investment options. A 401(k) is a great way to get your retirement funds started, but it's far from the pinnacle of investing.