Sound familiar? Rest assured that you’re not alone. When leaving an employer many people opt to take the easy way out and check the box next to “no change, leave funds in current 401(k).” Then they go on to their next job and forget about it. For some, this may be the best option, but for many, it’s not.

When is it a good idea to leave your 401(k) with your old employer?

• If you have a small balance (usually less than $20,000–$25,000), otherwise you’ll pay a custodian (bank or brokerage) an annual maintenance fee to hold the account.

• If you like the investment options available to you and don’t have the time or inclination to investigate the best place to invest outside the 401(k).

In other situations, it makes more financial sense to choose one of the other options available to you:

1.   Rollover the 401(k) to a self-directed IRA (either a traditional IRA or a Roth IRA) in an account at a new custodian. You can then manage it yourself or with the help of a financial advisor.

2.   Rollover the 401(k) into your new employer’s 401(k) if there are decent investment options available, you have a small balance, or you don’t want to manage it yourself.

There is a fourth option: cash out and pay tax and penalties (with some exceptions) on the balance. However, this is just not a smart choice for most people.

There are many advantages to rolling over to a self-directed IRA:

• Gives you more investment options, including exchange-traded funds and stocks.
• Possibly reduces record-keeping and other account maintenance fees.
• Reduces the number of investment statements you receive.
• Makes is easier to maintain an asset allocation and periodically rebalance the portfolio.
• Reduces the chances of duplication in your portfolio.
• Decreases the possibility that you will “forget” about your money.

Here are the steps you need to take to rollover your old 401(k) into an IRA:

• Contact the plan administrator at your previous employer company and ask to be sent an IRA rollover form. Be sure to check the boxes for no tax withholding; because you are planning to roll the funds over, there will be no tax consequences. Some companies will conduct a trustee-to-trustee transfer, which means you won’t have to handle the money, but most send checks.

• Open a new IRA account at your chosen custodian. If you can do a trustee-to-trustee transfer, you will fill in the new IRA account custodian and account number on the form. Otherwise, after you receive the check, it must be deposited in the new IRA account within 60 days so as not to trigger a taxable event.

Once the funds are in your new IRA, you will need to invest them. That’s when the next challenge begins.

For additional reading on this topic:

Did You Leave Your 401 (k) With Your Old Employer? From Kiplinger on-line

The recent Bay Bridge closure is a reminder that life is short and fragile. Photo by Michael Macor/San Francisco Chronicle

The moment I heard about the Bay Bridge near-catastrophe….I thought oh, my God, that could have been me, my husband, or any one of the many people I know and love who cross the Bridge regularly. As it turned out, I did know one of the people who was on the bridge that day.  Lucky for her – she walked away with 4 flat tires, a totaled car, and frazzled nerves – but she was alive.  We all admit that “life is short” but when we say this we are thinking of our normal life span and yes, it goes by too quickly. But life is also fragile and we have no control over so many things – including whether we’re driving on the Bay Bridge at the moment it collapses.

What we do have control over, is how we choose to live day by day, and also how we prepare for the inevitable day of our passing. There’s a reason why so many positive-thinking, self-help, spiritual guides suggest writing your own eulogy as a way to get inspired about how to live your life. This exercise forces you to think about how you want to be remembered….and if you are living that way now.  Many of us get caught up in the busyness of the day-to-day, and never step back to see if all that activity adds up to a life we are proud of.

Think for a second about those you’ll leave behind.  The kindest thing any of us can do for the people we love, who will inevitably be devastated by losing you,  is to plan and prepare. Execute a will and a trust. Decide who will be the best guardians of your children. Make sure the designated beneficiaries on your retirement accounts are up to date. See a financial advisor about life insurance- do you need it?  Let someone you trust know where the key to your safe deposit box is  and where to find the combination to your home safe ….store your important documents and make copies for a trusted friend or advisor.   Live lightly, when you buy stuff and store it, think about a loved one walking into a room or closet and having to decide whether to keep or toss, recycle or sell your belongings.

The Bay Bridge near catastrophe was scary and inconvenient but sometimes that’s what it takes to motivate us to make positive changes and to take care of business.

Take good care.