If you’ve changed jobs at any point, there’s a decent chance you have an old 401(k) sitting somewhere.
And I want to ask a question that’s easy to overlook:
Do you know what that account is actually doing right now?
Not long ago, I reviewed an old 401(k) for a client and we found it earning around 0.6%.
Not because they chose a super-conservative option.
Not because they were trying to “play it safe.”
They just didn’t realize what had happened.
After they left their employer, the account was moved out of the company plan and ended up in what was essentially a cash-type account. So instead of being invested for long-term growth and compounding…
- It wasn’t really growing
- It wasn’t participating in the market
- It was simply sitting there
For years.
If this makes you a little uneasy, you’re not alone.
This happens more often than people think, especially when life gets busy. Logins get lost, statements go paperless, and it’s easy to assume:
“It’s a retirement account… so it must be invested.”
The bigger issue isn’t just the return
Yes, 0.6% is low.
But the bigger problem is usually the opportunity cost.
When retirement money sits on the sidelines, you may miss out on years of potential compounding. Even a few years can make a meaningful difference over the long run.
Common options for an old 401(k)
In most cases, you’ll have a few routes to consider:
1. Leave it where it is
Pros: Simple, no immediate action
Cons: Limited choices, easy to forget, may not align with your overall plan
2.Roll it into your new employer’s 401(k)
Pros: Consolidates accounts, stays tax-deferred
Cons: Your options depend on the quality and costs of the new plan
3.Roll it into an IRA
Pros: More flexibility and investment choice, often easier to manage strategically
Cons: Requires a bit more coordination and ongoing involvement
There’s no one “right” answer for everyone. The goal is simply to make sure your money is where you think it is and doing what you need it to do.
At Village Private Wealth, we help people spot things like this all the time. Most of the time, nothing was done “wrong.” It was just easy for it to get overlooked.
If you have an old 401(k) you haven’t checked in a while, we are always happy to take a quick look with you and talk through the options.