Enter your balance, your age, and the expense ratios of your current plan and the IRA you'd move to. The tool shows the annual cost of each in dollars and the difference between them — plus the two traps that cost people real money: the 20% withholding on indirect rollovers, and the taxes and possible penalty on cashing out. It projects no returns and recommends no option.
Your old 401(k)
Annual cost, in dollars
The 20% withholding trap. If your old plan cuts the cheque to you instead of sending the money directly to the new account (an "indirect" rollover), the plan must withhold 20% for taxes. You then have 60 days to deposit the full original amount — including the withheld 20% out of your own pocket — or the shortfall is treated as a taxable distribution. On the balance above that is the "withheld" figure shown in the results. The fix is simple: always ask for a direct rollover, payable to the receiving institution, so nothing is withheld at all.
Reading the four options
- Leave it. Costs your current expense ratio every year. Fine if the plan is cheap; expensive plans quietly compound against you.
- Roll to the new employer's plan. Costs whatever that plan charges — we show it at your current ratio as a placeholder; replace mentally with the new plan's fee disclosure.
- Roll to an IRA. Costs the IRA's ratio. The dollar difference against your current plan is the number this tool exists to show. Note an IRA is not automatically cheaper — enter the real ratios and let the arithmetic speak.
- Cash out. 20% is withheld immediately, the full amount is taxable income, and if you are under 59½ a 10% early-withdrawal penalty generally applies on top. The tool flags this based on the age you entered.
Assumptions used
- Cost = balance × expense ratio, computed on the balance you entered. No investment returns, no growth, no market movement — this is deliberately cost-only math.
- The new-employer-plan line reuses your current ratio because we cannot know the new plan's fees; get its fee disclosure and re-run.
- Tax figures show only the mandatory 20% withholding. Your actual tax on a cash-out depends on your bracket and state — it is usually more than 20%.
- Differences in investment menus, creditor protection, loan features and Roth treatment are real and are not modelled here.
Common questions
Why does the 'new plan' cost say 'assumes same ratio'?
The tool does not know the new employer's fund lineup. It assumes the same expense ratio as your current plan so you can see the IRA comparison; check the new plan's own disclosure.
What is the 20% withholding?
Federal law requires 20% to be withheld from an eligible rollover distribution paid to you rather than to another plan or IRA. It is not the tax — that is settled on your return — but it is gone from the check.
Is a cheaper IRA always the right answer?
No. Creditor protection, employer stock, loans, and the age-55 rule can all favour staying in a plan. The figure here is cost alone. The four options, compared →
Deciding what to do with an old 401(k)?
This is one of the four situations we handle most. We'll lay out all four options against your actual numbers — as a fiduciary, not a salesperson.