Man quits job and mysteriously leaves behind 13 ketchup packets and four sporks.
When it comes time to pack up your desk and move on to a new company's corner office, don't forget those trillions of dollars in your lower left-hand desk drawer.
According to the Department of Labor, Americans move to a new employer once every four years, leaving a trail of old 401(k) and 403(b) plans. (No reliable statistics about leftover packets of sweet-and-sour sauce were available at press time.)
"Mountains of money are moving in the next decade," reports a Financial Research Corporation study on the rollover market. Mountains, indeed: Consumers will take out more than $3.7 trillion from qualified retirement plans by 2006, according to "Money on the Move: Strategies for Capturing Retirement Rollovers." More than half of that amount -- $2 trillion -- will be funneled into individual retirement accounts.
With the average 401(k) balance at $50,000, companies such as Fidelity Investments, Charles Schwab
If you've watched any TV in the past, oh, year or five, you may have noticed that the retirement-market behemoths are gunning for your money. One phone call (or click), a single document, and finito!
Don't run slow-motion into their arms for the marketing footage just yet. First, make sure the bulk of your contribution is going toward your retirement nest egg, not to the brokerage company. You can get into the nitty-gritty of what each discount brokerage firm offers, including customer service and one-time freebies. Or you can take a shortcut and home in on two particular things: fees and trading commissions.
By law, your broker can charge an annual fee for maintaining your IRA -- aptly called an "IRA maintenance fee" -- but many don't. Then there are fees for account inactivity and for transferring your money out of the account. Trading commissions can also erode your returns. (In this side-by-side comparison of sponsor-brokers, you can see that Ameritrade
Isn't it time to liberate that money sitting in your old work retirement accounts? Here's more help if you need it.
- Rollover or direct transfer? Both are easy to execute, but the direct-transfer method helps you easily avoid any costly tax snafus.
- Answers to reader questions about the rules of rolling over.
- Oops! Did you forget to save for retirement? It's not too late to make significant headway.
Dayana Yochim owns none of the companies mentioned in this article but is sure that they all have really nice personalities. Charles Schwab is a Motley Fool Stock Advisor pick. The Fool has a disclosure policy.