Q I changed jobs this year. I have about $150,000 in a 401(k) account that I started with my former employer. I have started a new 401(k) account with my new employer. What do I need to consider when deciding if I should transfer my money to my new 401(k)? 



A I'm glad you're participating in your new 401(k) plan. There are a couple of things to consider before shifting the money out of your old plan.

First you should check with your current employer to make sure you can transfer money from your previous plan into your new one. The answer is usually "yes," but not always. The law gives companies a lot of leeway in designing the rules of their retirement savings plans.   

Let's assume you can make the transfer. You would want to contact the departments that handle the plans at each company to get their advice on procedures for transferring and accepting the money.  There will be no tax consequences or penalty so long as the money is moved from your former employer's plan directly into the new plan. And preserving the tax shelter is why it's so important to closely follow the rules.

Now, should you shift the money into your new plan? Do you like the investment options offered by your new employer? Are the fees low? If so, it could make sense to move the money to your new plan.

However, if you really like the plan options of your former employer compared to your new employer, you could stick with the old plan for now, assuming it's OK with your former employer. Many companies will allow their ex-employees keep the money in the 401(k) even though they are no longer on the payroll.

Yet in many cases the best choice of all is a "rollover" to an IRA. The reason is that you have more control and choice over the investments. You, not your employer, get to choose the investment company and the investment options. It's a good way to put the money into a low-cost broad-based investment option.

Chris Farrell is economics editor for "Marketplace Money." Send questions to cfarrell@mpr.org.