The Planning Corner: When Not to Roll Over a 401(k)

Jan 15 2026 | Back to Blog List

VIDEO TRANSCRIPT:

David Ernst: Hi everybody, I'm David Ernst, partner at Cedar Point Capital Partners. And as always, I'm joined by Nick Timm, our director of financial planning.

Today we're talking about a common assumption that you should always roll over your 401(k), when that might not always be the best move.

Nick, let's talk about access to the money. When might keeping assets in a 401(k) make the most sense?

Nick Timm: Well, a 401(k) would allow early access to the money without a penalty at age 55. So, if you're separating from service and want some additional flexibility, or if you want to retire early, this might be the better option rather than rolling over to an IRA, where the age there would be 59 ½.

David: And what about an individual who might have company stock in their 401(k)?

Nick: Company stock might allow you or qualify you for what's called net unrealized appreciation, or NUA. This would allow you to get the growth on that stock out and pay long-term capital gains tax rates on it, rather than ordinary income rates.

David: How does this affect high-income tax planning?

Nick: So, for individuals that make over about $170,000, or married couples that make over $250,000, this could impact your ability to do backdoor Roth IRA contributions. So, a 401(k) might allow you some additional flexibility there as well.

David: And finally, how about investments and fees?

Nick: Some plans offer plenty of investment options, low fees, and maybe even a brokerage option. So [these are] things that you should review and compare when switching plans and could affect your long-term rates of return as well.

David: The bottom line: Rolling over a 401(k) is a strategic decision and not a default one. If you're leaving your employer and want to get this right, please reach out to us at Cedar Point Capital Partners.

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