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Americans are changing jobs more frequently than in previous generations, so it's likely that you have (or will eventually have) a retirement account or two from former employers. While rolling over your old 401(k) into an IRA has some clear benefits, like the ability to keep all of your money in one place or the freedom to choose any stocks, bonds, or funds you want, there are a few things you should know.

Dan Caplinger: One of the most important aspects of deciding whether or not to roll over an existing 401(k) or IRA is to look at how much you're paying in expenses and compare it to what a new account would charge you. In dealing with the common situation of rolling over a 401(k) from a former employer, many advisors point out that you'll have much more flexibility to invest within an IRA than in a 401(k), but the question they leave out is whether those new options will be more costly than what your 401(k) offers.

In some cases, 401(k) accounts are extremely expensive, using high-cost funds and making it preferable to move assets out as soon as possible. Yet some high-quality 401(k) plans make use of institutional mutual-fund share classes, which offer much lower expense ratios than you can get from the funds that most retail customers can buy. As a result, what makes sense for one person to do might be exactly the wrong move for another, based solely on the investment options they have available to them in their 401(k).

Before you roll retirement money over, have a fixed plan for what you expect to do with your new account. That way, you can compare costs and assess whether it really makes sense to do a rollover in the first place.

Matt Frankel: It's true that in an IRA you can invest in virtually any stock, bond, ETF, or mutual fund you can think of, but before you decide to roll over your 401(k) there are a few things to keep in mind.

First, stock investing requires substantial research to pick the right kind of stocks, and ongoing homework to monitor your portfolio. Plus, too many Americans do the exact opposite of what they should (buy high and sell low) simply because they don't know how to keep their emotions out of investing. There is nothing wrong with choosing your own stocks – just make sure you have the time and patience to do it right. The same can be said for selecting individual bonds, as opposed to the bond funds offered by your 401(k).

Second, it may be possible to replicate your 401(k) holdings in the form of mutual funds or ETFs in an IRA, but you may actually be better off leaving your money alone. As Dan mentioned, many institutional funds (like those in 401(k) plans) have significantly lower expenses than comparable funds you may be able to obtain privately. So, before you decide to create an IRA full of funds, do your homework and compare the expenses.

Finally, if you have no interest in managing your own investments, you'll need a financial advisor to handle your new IRA, which can end up costing you significantly more than the fees on the investments in your 401(k). Now, your financial advisor might be able to deliver better results in which case their fee is well worth it, but maybe not.

In a nutshell, investing in a 401(k) is the easy way to do it. There's nothing wrong with choosing to roll your 401(k) over, but make sure you understand what you're getting into first.

Jason Hall: If you're planning on rolling over multiple IRAs, you need to know about a big change that took effect in 2015, or you could get hit with a hefty tax bill. In short, if you intend to consolidate multiple IRAs together, you can only do them one at a time every 12 months. There are some exceptions, and it's important to note that a 401(k) isn't an IRA, so if that's what you're rolling over, you're not affected by this rule change.

It can be a little complex, so here's a chart that the IRS put together to make it easier to understand.

Rollover Chart Irs

Image source: Internal Revenue Service (opens PDF)

Use this as a guide, and you should be able to identify which accounts you can rollover, and when. If you're still not 100% clear, your tax professional should be able to help you, as should the folks at your discount broker. At the end of the day, consolidating multiple same-type accounts together is a good idea if it helps you keep track of your money and reduce fees, but not if it costs you money in tax penalties you can avoid by following the rules. 

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