Mailbag: Is It Bad to Leave My Old 401k Where It Is?

June 5, 2025

If you’ve switched jobs in the past few years, chances are you’ve got an old 401k sitting somewhere, collecting dust and possibly fees. Today, Frank answers a listener’s question about what to do with old 401ks, when a rollover might make sense, and how to avoid common pitfalls when making the switch.

Frank walks through the potential risks of ignoring an old account, from missed investment opportunities to surprise tax consequences. You’ll learn why target-date funds may not serve your unique needs, how IRA rules differ from 401k rules (especially after the SECURE Act 2.0), and what options exist even if you’re still working for the same employer.

While it may seem harmless to leave your old 401k alone, that decision requires careful consideration, so stay tuned!

Here’s what we discuss in this episode:

🏦 What can happen if you leave your old 401k untouched

📉 Why target-date funds may not be the best fit for you

🧾 How some 401k plans can trigger tax bills for beneficiaries

🧭 Why a rollover could offer more investment flexibility

0:00 – Intro

0:45 – Listener question

1:06 – Why Target-Date Funds Aren’t Always Ideal

2:14 – Secure Act 2.0 & Potential Tax Traps

3:31 – Tax implications

4:56 – Building a Plan After the Rollover

5:55 – In-service distributions

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