I have a traditional 401(k) through my previous employer. I was planning to roll it into a traditional IRA at Vanguard for lower fees and more investment choices, but is there any reason to leave it as a 401(k)? Do 401(k)s have any benefits over IRAs?
One reason might be that your 401K is more protected than an IRA is if you were to be sued.
I believe that to be true but I’m not a lawyer.
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Yes, in some states, 401(k) plans are treated better than IRAs in bankruptcy.
Another reason is if you think you might ever be above the contribution limits for a Roth IRA, and will have to use the Back-Door Roth method. But you can also roll the existing 401(k) or traditional IRA into a new employer’s 401(k) plan, if the new employer allows it (I suspect most do).
I’d lean toward rolling into a 401(k) at your new employer if possible, and if the new plan is decent.
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401k plans are under ERISA. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 gives federal protection to IRAs up to $1 million (though money rolled over from an ERISA-qualified plan into an individual account may not be subject to these limits).
Here is a link with more information: Are my Retirement Accounts Protected from Creditors? | Equifax).
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