Generally speaking, it makes sense to consolidate old 401(k) and 403(b) plans into one place. But there are a couple instances when it might make sense to leave your money where it is. Let’s look at both cases.
Advantages to consolidation:
Simplicity. Having all of your money in one place makes it easier to manage your investments, as you have to pay attention to only one account.
Fees. One account is almost always less expensive than multiple accounts.
Investment freedom. If your money is with an old employer’s plan, you are limited to the investments available in that plan. If you invest in an IRA, you have more choices.
Safekeeping. It’s not uncommon for people to lose track of their old plans.
Why you might want to keep your separate accounts:
Low fees. If your previous employer has a great plan with low fees, it might make sense to leave your savings in their plan, especially if you are nearing retirement.
Tax reasons. In rare cases, there could be good tax reasons to leave your money behind.
To decide if consolidating your retirement accounts is right for you, look at your personal circumstances and consult a tax advisor if necessary.