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Author: Derek Melvin

What Do I Do With Old My Old Retirement Plan?

Today is the last day at your soon to be former employer. At this point, I am sure there is plenty going through your mind. Some may be ecstatic to be leaving and looking forward to what is next, others may be packing up with a sour taste in their mouth. Either way, plenty of questions to be answered as you transition to a new job. One of those questions needs to be, what do I do with my old retirement plans? I’m sure you’d be lying if that one was high up the list…

When I say retirement plans, we are talking about 401(k)’s, 403(b)’s, 401(a)’s, 457(b)’s, or any other employer sponsored retirement account. With each of these accounts, they are established and held by that specific employer, so once you are out the door, you can no longer make contributions to these plans.

Despite you no longer being able to contribute to these plans, these are still your accounts with your hard-earned retirement savings dollars, so you need to be sure you are taking appropriate action on what to do with these moving forward.

Whether it be an old 401(k), an old 403(b), an old 457(b), or so forth, it is critical that you are making the right moves with these accounts to get the most of what you have contributed to these thus far.


What are the options available for old retirement plans for doctors?

For common retirement plans that are available to doctors, you typically have four different options upon leaving your employer.

These options include:

  1. Leave your money with your former employer’s retirement plan
  2. Move it to your new employer’s plan.
  3. Rollover the money into an IRA.
  4. Roth Conversion

Let’s break these down.

If you would like to speak with a financial advisor on your specific financial situation, reach out to us and we will contact you for an initial consultation.

Money saved up for retirement accounts.

Option 1: Leave your money with your former employer’s retirement plan

As you are transitioning out of your current position, usually you will have some time off in-between roles.

Once you leave, your money will stay with your previous employer and stay invested exactly how you had left it, which makes this option an attractive temporary solution. Where you can run into problems is when you leave it in the account for a long period of time. If you have multiple old employers, you can have a handful of accounts to keep track of.

I know from my past clients that it can be hard enough making sure that their current employer retirement account is invested appropriately for their retirement goals. Now let’s add in another old 401(k), and another old 403(b), and another old 401(k). It creates more and more of a hassle to manage all these different accounts and making sure that these are helping you reach retirement.

This is one of the biggest mistakes I see as old retirement plans get neglected and may have been inappropriately invested for years and years, which can put a big dent in your financial plan.

Along with the time-consuming upkeep of making sure these old retirement accounts are invested appropriately and that you are remembering your login information, we also must understand that you are limited to only a handful of investment options offered by your old employer.

Some plans have better options than others, but still very limited. There are thousands of different mutual funds that you can invest in, yet you are only given 10 – 20 in an employer 401(k). It is important that you are aware of the investment options in the plan to make sure you can invest your dollars in line with your goals for retirement.


  • Do not have to do the necessary steps to move / transfer your account
  • If you like your investment options, you can leave it to have access to those options


  • Time consuming to properly invest multiple retirement accounts and ongoing account maintenance
  • Must work with old employer for any questions you have with the account
  • Another password and login information to have to remember
  • Subject to investment options offered by the plan


Option 2: Move it to your new employer’s plan.

With most retirement plans for doctors, which are primarily 401(k)’s and 403(b)’s, you will be able to move these dollars into your new retirement plan. As you are getting enrolled in your new retirement plan, be sure to ask them if they accept old employer rollovers into the account and you will get your answer on if this is an option.

This option eliminates one of the major concerns with leaving it in your old plan, and that is simply accessibility. With your current employer retirement plan, you are going to give it substantially more attention than the old 401(k) from that old job you never want to think about again. That makes it more attractive as these accounts are now consolidated and you only must worry about investing this one account.

This also shares the same downside as option 1 with regards to the investment options available. If your investment options at your current employer are not ideal, then we probably don’t want to subject more of our retirement savings nest egg to the performance of those investments. In this case, rolling your 401(k) into an IRA (Individual Retirement Account) may make the most sense. With that in mind, we do need to understand what a Rollover IRA or a Roth IRA conversion is before proceeding.

Please note for some other plans, such 457(b)’s, there may be restrictions with the distribution of the plan, so be sure you know these stipulations before contributing. If you would like to speak with an advisor regarding your employer retirement plans, please contact us and we would be glad to connect to answer any questions.



  • Consolidating the accounts can make managing your portfolio easier because all the dollars are in one account.
  • Typically, it is a smooth process to rollover from an old employer plan to new employer plan
  • Higher likelihood of you performing ongoing account maintenance since you are currently contributing to the plan


  • Subject to investment options offered by the plan
  • Less flexibility if you wanted to do a Roth conversion at any point

Doctor contemplating retirement accounts.

Option 3: Rollover the money into an IRA

Starting from the top, what is an IRA?

An IRA is an Individual Retirement Account. You can open an IRA through a bank, an investment company, an online brokerage, or a personal broker. From there, you can choose how to invest the dollars in the IRA’s. IRA’s do have contribution limits but there are no limits to how much you rollover or convert into the account. This means there is no limit with regards to the size of your previous employer account to be eligible to transfer it to an IRA.

Is my 401k an IRA?

This is one of the most common questions I receive when discussing IRA’s. No, a 401(k) is not an IRA. An IRA is opened on your own and outside of your employer. You contribute to this with your dollars and is not done through your employer’s payroll.

What is a rollover?

A rollover is simply another term for a transfer. When you do a 401(k) rollover into an IRA, you are simply transferring the balance from your 401(k) to an IRA. The funds then arrive in your IRA, and you now are in control of managing these moving forward.

Traditional IRA vs Roth IRA

Over the years, we have seen an uptick of retirement plans for doctors offering Roth options in their 401(k) or 403(b). If you have Roth dollars from an old retirement account, you will most likely want to rollover those funds into a Roth IRA.

To learn more about Roth and Pre-Tax dollars, visit a previous blog post we wrote that breaks this down.


Why would an IRA rollover make sense to me?

Rolling over your old employer account to an IRA gives you more control of these dollars moving forward. You have much greater investment options, ease of access, and the ability to transfer it to accounts much easier. You also are able to have these dollars managed by a financial professional, which is not an option with your employer retirement account.

For example, you open an IRA with one firm, and you want to transfer the balance to a new firm to manage it in the future, it is extremely easy to go through that process.

As you approach retirement, there are also ways you can take advantage of current tax laws and convert IRA dollars to a Roth IRA, which allows you to have a source of tax-free income in retirement.

One downside to a Rollover IRA is that it may disallow you from making Roth contributions if your income is above the limit. If you have to contribute the backdoor Roth IRA based on your income, it is important to not have pre-tax dollars outside of your employer plans. I won’t go into too much detail on how that works, but I would recommend speaking with a financial professional prior to rolling your old 401(k) or 403(b) into an IRA.


  • Wider variety of investment options
  • Can be professionally managed
  • Flexibility for future Roth conversions
  • Account is established under your name, not your employer



  • Can affect your ability to do the “Backdoor” Roth IRA based on your income
  • You must ensure you are properly managing the account and providing ongoing account maintenance if not managed professionally

Option 4: Roth Conversion

A Roth conversion is where you take pre-tax retirement savings dollars and convert the dollars into a post-tax Roth IRA.

With a Roth IRA, you pay taxes on the amount that you contribute or convert into the plan in the year that those take place, yet the account grows tax-free and all qualified withdrawals in retirement are tax-free as well.

A lot to unpack here. If you take your old 401(k) or 403(b) and convert it into a Roth IRA, you will pay ordinary income taxes on the amount you convert in the year that this took place. This is very important to note and make sure that you have the cash on hand to cover the tax bill for the year.

The main advantage is that once you pay the taxes up-front, you never pay taxes on those dollars again.

Now what about the investment growth over time? In a Roth IRA, you do not pay taxes on the growth in the account either, if withdrawn in retirement. Therefore, if you have the cash to cover the tax bill and are in a lower income tax bracket than you expect to be in the future, it may be extremely advantageous to do a Roth IRA conversion with your old 401(k) or 403(b).

With a Roth IRA, you also have the full world of investment options available to you, flexibility with the account, and can be professionally managed, as mentioned with the Rollover IRA.

I’ll mention it again here as it is very important. Be sure to speak with a financial professional, whether it be a financial advisor, CPA, or both before doing a Roth IRA conversion with an old 401(k) or 403(b).



  • Source of tax-free income in retirement
  • Wider variety of investment options
  • Can be professionally managed
  • Account is established under your name, not your employer


  • Pay ordinary income taxes on the converted amount in the year you convert
  • Must ensure you are properly managing the account and providing ongoing account maintenance if not managed professionally

Option 5: Cashing Out

You also do have the option of cashing out the funds from an old retirement plan.

With that said, if you are younger than age 59.5, you will pay ordinary income taxes and a 10% penalty on these funds that you cash out from your old retirement plan.

If you are over age 59.5, this can be a viable option to use your retirement savings dollars.

Be sure to speak with a financial professional that understands your specific comprehensive financial plan to discuss if this is right for you.


  • You get the cash now


  • You pay ordinary income taxes on the amount withdrawn
  • If you are under age 59.5, you pay a 10% early withdrawal penalty

What is the best option for me?

You knew it was coming – it depends.

As you can see in this article, there are many considerations to have in mind with what to do with an old employer 401k, and some options are going to be best for others based on what they have going on financially.

With that said, this is not a decision you can take lightly. These are your hard-earned retirement savings dollars here, so you need to make sure you are taking the appropriate steps in managing them.

If you have any uncertainty on these questions, feel free to reach out at any time and one of our advisors would be happy to assist you in making these decisions.



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Investing involves the risk of loss, including total loss of principal.  This should not be construed as individualized investing advice.  Consult with your investment advisor to develop an appropriate investment strategy for your circumstances.  This should not be construed as individual tax advice.  Consult with your tax professional for specific tax ramifications for your circumstances.