Compare Rollover IRA Mutual Funds
If you are leaving your job, one of the most important decisions you have to make concerns the money in your 401k. You might be able to leave the account with your former employer, but that could mean losing track of the investments and how they are doing. A better strategy for many workers is to move the money from the 401k plan to a rollover IRA with access to mutual funds.
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Instructions
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Contact several mutual fund families and ask for information on their rollover IRA programs. Most major mutual fund families will be able to assist you in the rollover process.
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Review your most recent 401k statement and note the types of funds in which you are invested. If you want to keep your money invested the same way, you must find mutual funds with a similar investment objective.
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Request a prospectus for funds with an investment objective similar to what you have now. It is helpful to have a copy of your 401k statement with you when you call. That will make it easier for the mutual fund representative to find funds with a similar investment objective.
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Ask the mutual fund representative to send prospectuses for the firms' index funds as well. Index funds can be a good way to invest rollover IRA money, since most managed mutual funds fail to beat the market averages over the long term. A recent study reported by Money Magazine found that over the long run index funds beat the performance of managed funds, and they do so at lower costs.
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Review each prospectus carefully, particularly the sections dealing with annual expenses and performance. Check the performance of the fund relative to its benchmark index--this information should be included near the front of the prospectus. A managed fund that has consistently beaten the averages might be worth the extra cost, while one that has lagged the index probably is not. When looking at expenses, keep in mind that some index funds charge as little as 0.18% per year, so use that as your benchmark.
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References
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