[Katrina]

I am new to the FI community. I have two 401K due to Covid. Worked one job for over 20 years, had to move to a second for two years.

Now on a third company that I am contributing to. Question is, should I combine the two old 401K to my current third or just leave them for more diversification?

[Arun]

Is your new employer offering you low cost index funds? What are the fund expenses? What are the admin fees for the 3 plans?

Does your new employer accept incoming roll overs from old 401(K)s?

You might not necessarily get more diversification if they all have similar funds, but fees could be different.

But if your new employer plan is good and accepts rollovers, then you are better off than rolling the old ones over to an IRA if you want to do backdoor Roth.

[Frank]

That is not what diversification means. If you like your current 401k, transfer the old ones into it.

[Joel]

There is nothing diversifying about having multiple old 401k accounts. The main reason to not consolidate 401k accounts is that the older 401k plan(s) have better terms, fees, etc…

[Heather]

Rollover IRA for the 2 old ones so you have control over where your money is invested.

[Dustin]

Start a rollover IRA (I use Fidelity), & roll the old 401(k)s into it. You can start it by doing the rollover.

[Megan]

diversification isn’t having different accounts, diversification only occurs if what you are invested in is markedly different.

Diversification cam happen in 1 account or many accounts.

I’m seeing a lot of immediate recommendations for a Rollover IRA.

That recommendation, however, doesn’t account for the potential tax issues if having a balance in a traditional IRA if now or in the future you want to make backdoor Roth IRA contributions.

[Hubert]

I would start with calling each 401k plan, and asking if they are charging you any fees. Perhaps your employer used to cover the fees and now you are paying for them.

Or download the statement and try to find any admin fees etc.

You can review where your money is invested. For example, one 401k plan may have a S&P500 index that charges .9% management fee, and your other plan may charge .08% management fee.

You might be paying 10x more for an identical index.

You can then transfer the assets to the custodian you prefer.

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