If you’ve recently left your job or faced a layoff, you might be wondering what to do with your retirement savings. Even if you’ve been away from your employer for a while but still have a retirement account with them, you have several options for rolling over your 401(k).
Exploring Your Rollover Options
Online Brokers
If you prefer a hands-on approach and want to leverage your investing knowledge, online brokers offer a “do it yourself” platform for managing your retirement funds.
Robo-Advisors
For those who want professional management at a lower cost, robo-advisors are an excellent choice. These platforms often include valuable features like tax-loss harvesting to optimize your investments.
Best Online Brokers for a 401(k) Rollover
Charles Schwab
Charles Schwab is known for its comprehensive offerings, catering to both novice and experienced investors. If you want to continue investing in mutual funds similar to those in your 401(k) or explore Schwab’s own no-transaction-fee funds, this broker is an excellent choice.
- Standard pricing for mutual funds: $0 for Schwab funds or no-load, no-transaction-fee funds; otherwise, up to $74.95.
- Highlight: About 4,300 no-load, no-transaction-fee mutual funds.
Wealthfront
Wealthfront is ideal if you prefer automated management of your IRA. This robo-advisor builds portfolios based on your risk tolerance and financial goals, offering reasonable management fees.
- Standard pricing: Management fee is 0.25% of assets annually.
- Highlight: Automated financial planning tools and a comprehensive cash management account.
E-Trade
E-Trade stands out for its robust research capabilities and user-friendly mobile app. The broker offers commission-free mutual fund trading, making it a great option for long-term investors.
- Standard pricing for mutual funds: Free.
- Highlight: More than 6,000 no-transaction-fee mutual funds.
Fidelity Investments
Fidelity excels in customer service and low-cost investment options, making it perfect for beginners and experienced investors alike.
- Standard pricing for mutual funds: Free for Fidelity funds; $49.95 to buy and $0 to sell transaction-fee funds.
- Highlight: Offers four zero-fee index funds and nearly 3,400 no-transaction-fee mutual funds.
Betterment
Betterment, a leading robo-advisor, can help you build a diversified retirement portfolio. It offers low-cost funds and automatic rebalancing to keep your investments aligned with your goals.
- Standard pricing: Management fee is 0.25% of assets annually.
- Highlight: Uses funds from 13 different asset classes and offers social impact investing options.
Firstrade
Firstrade has expanded its offering of commission-free mutual funds to over 11,000. The broker provides advanced fund research tools and a user-friendly mobile app for managing your portfolio on the go.
- Standard pricing for mutual funds: $0 on all mutual funds.
- Highlight: Commission-free trading on over 11,000 mutual funds.
Interactive Brokers
Interactive Brokers is suitable for both active traders and retirement investors. Although trades aren’t free without the IBKR Lite plan, the pricing is still competitive.
- Standard pricing for mutual funds: Free for no-transaction-fee funds; otherwise, 3% of trade value or $14.95, whichever is less, with a $3,000 minimum initial purchase.
- Highlight: About 19,000 no-transaction-fee mutual funds.
Merrill Edge
Merrill Edge offers a comprehensive range of brokerage services, making it a solid choice, especially for Bank of America customers who can easily manage both bank and brokerage accounts.
- Standard pricing for mutual funds: $0 for no-transaction-fee funds; otherwise, $19.95 for online buys and sells.
- Highlight: More than 800 no-load, no-transaction-fee mutual funds.
Schwab Intelligent Portfolios
Schwab’s robo-advisor service, Schwab Intelligent Portfolios, provides automated investment management with no management fees, making it an attractive option for those who prefer a hands-off approach.
- Standard pricing: No management fee.
- Highlight: Requires a minimum of $5,000 to start and offers 24/7 customer support.
Vanguard
Vanguard is renowned for its low-cost investment options and excellent service for long-term investors. It offers free trades for Vanguard mutual funds and competitive rates for other funds.
- Standard pricing for mutual funds: Free for Vanguard family funds; $8-$20 for others.
- Highlight: Over 3,000 no-transaction-fee mutual funds.
Factors to Consider When Choosing a Broker
When deciding where to roll over your 401(k), consider the following:
- Cost: Look for brokers with low trading commissions and minimal account fees.
- No-transaction-fee mutual funds: Choose a broker that offers a wide range of no-transaction-fee mutual funds.
- Investment strategy: Ensure the broker aligns with your investment approach, whether you prefer self-directed trading or automated management.
Your Choices for a Rollover
After leaving a job, you generally have three main options for handling your 401(k):
- Leave it with your old employer: This is the easiest option but may require a minimum account balance.
- Roll it over to your new employer’s 401(k): This consolidates your retirement funds and simplifies management.
- Roll it over to an IRA: This provides the most investment flexibility and potentially lower fees.
Rolling over your 401(k) into an IRA offers broader investment choices and can often result in lower fees. Choose a broker that fits your financial goals and provides the services you need for a successful rollover.