How to roll over an old 401(k)

Old 401(k)s are a little like the old clothes in the back of your closet

Old 401(k)s are a little like the old clothes in the back of your closet. You know you should do something about them, but there they sit, mostly out of sight and mind.

And so it is with your old 401(k). If deciding what to do with an old (k) plan has been on your to-do list for a while, here are the key steps you should take to get it done.

If your balance in your former employer’s 401(k) plan is over $7,000, you can leave the money behind in the old plan or roll the assets into an IRA or your new employer’s 401(k).

But if your balance falls below that $7,000 threshold, some of the decision-making may be out of your hands.

Assuming your balance is over $7,000, your next task is to decide whether to roll the money into an IRA or keep it inside a 401(k).

I often recommend rolling over the assets from a former 401(k) into a no-fee IRA with a topnotch mutual fund company or discount broker. But some people value the extra creditor protections that can accompany 401(k) assets versus IRA assets, while others may prize 401(k)-specific investment options.

If you think you will be better off leaving your money inside a 401(k) rather than rolling it over to an IRA, the next job is to conduct some research on your own 401(k) options.

Even if you do decide to stay with a 401(k), you may need to decide whether you’re better off staying put in your former employer’s plan or that of your new employer.

If a rollover to an IRA is the way to go, the next step is to identify the right brokerage firm or mutual fund company. Look for a firm that offers a breadth of high-quality investment options with no additional layers of fees for IRA investors. Target-date funds