4.3 USA - 401k Consolidation Made Easy: Transfer Old Pots & Dump High-Cost Default Funds
Once you've mapped out your 401k accounts, decide whether what you have is right for you. If not, you have the power to change that.
Missed last week? Read it here, or see the full escape map here
Living in the UK? Read the UK version here
TL;DR: 401(k) Consolidation Made Easy
If you’ve worked multiple jobs, you probably have forgotten 401(k)s scattered across providers
You can roll them into an IRA or your current 401(k) — tax-free — and regain full control
Most people are defaulted into bland or expensive funds without knowing it
Once you consolidate, you can switch into low-fee index funds that actually grow
Stop leaving your retirement to chance — take control, reduce fees, and align your investments with your goals
401k Spaghetti
If you’re like most people, and have worked for a few different employers, you may have multiple old 401k accounts which you have forgotten about, or paid no attention to, and a current workplace 401k.
Your retirement account landscape may be a bit of a mess.
And, all of these accounts might be invested in asset classes or allocations that you may or may not be happy with.
But you have the power.
You can decide what all of those are invested in.
Want 100% equities? You got it.
Want 60-40%, go for it.
But first you need to find out where your pensions are.
The 401k Mapper - Find your accounts
Use the Pension Mapper worksheet to track down all your pensions.
You may have already done this in 2.3 Discovering What You Already Own, but if you didn’t, here’s your chance.
This is a vital step in understanding your current situation — and in taking full ownership of your financial future.
Download the 401k Mapper here:
In it, list:
Each 401k you know about
The current value or pot size
What it’s invested in
401k Detective Work
Be tenacious. Use every tool you’ve got:
📞 Contact old employers — ask who your 401k provider was
🧾 Check past payslips and old 401k statements
🔍 Use the national registry of unclaimed retirements benefits -
Contact Each Provider
Once you’ve identified them:
Ask for online access or a recent statement
Look at what the money is invested in
Ask yourself: Does this reflect what I believe in?
If not - do you want a different asset allocation?
Taking Back Control
If you’re no longer contributing to old workplace 401k’s, they’re just… sitting there.
You might be happy with their performance.
But you might not be.
In order to simplify the number of accounts you have - there are two options for consolidating old 401k’s:
1. Transferring old 401k accounts to your IRA
“Rolling” old 401k’s into your IRA gives you back control.
Open a Rollover IRA (or use your existing traditional IRA)
Contact your 401(k) provider
Ask for a direct rollover to avoid taxes and penalties
They'll send a check — either to your IRA provider directly or to you with your IRA's name on it (e.g., "Fidelity FBO [Your Name]")
Deposit it into your IRA within 60 days if the check is made out to you
Important: If you deposit it late, the IRS treats it as a taxable withdrawal
Invest the funds according to your desired asset allocation
Once it’s there, you can invest it in whatever you like - index funds, ETFs, diversified portfolios.
2. Transferring old 401k accounts to your Current 401k
1. Confirm That Your Current Plan Accepts Rollovers
Not all 401(k) plans do, so:
Ask your current HR or benefits department
Or check your 401(k) plan provider’s website
2. Gather Info on Your Old 401(k)s
Log in or call the old provider
Ask:
What’s the current balance?
Can I do a direct rollover?
Who do I make the check payable to?
3. Request a Direct Rollover
Contact the old provider and request a direct rollover to your new 401(k)
Provide the name and mailing address of your current 401(k) plan provider
Make sure the check is made payable to:
"[New provider name] FBO [Your Name]"
("FBO" = For Benefit Of)
4. Notify Your New 401(k) Plan Provider
Let them know a rollover is coming
Ask if there’s any paperwork to complete
Confirm how they’ll credit the funds once received
5. Follow Up Until It’s Completed
Track the check delivery
Confirm with both providers that it has landed and been processed
6. Allocate Your Rollover Money
Once it arrives in your new 401(k), you’ll usually need to choose your investments - it won’t auto-invest
Once your accounts are consolidated - or even before - it’s crucial to make sure your money is actually invested in a way that serves your goals.
Switching From the Workplace 401k Default Fund
Unless you specify what you want your 401k invested in, providers will put your money in their default option.
Most default funds are called ‘target date funds’ - these adjust your risk automatically as you approach retirement, but they often come with higher fees or more conservative allocations than you need.
It will more often than not be a safe, low volatility, lower returns fund.
This may or may not be what you want.
You may have a 20+ year time horizon, and want all equities, or you may just want to pay a lower fee.
I once helped a friend to investigate an old work pension. He found out that it had been invested in cash, and had earned on average less than 1% per year, whilst inflation was at 2% or above, for over a decade.
So for almost 15 years it had been losing money in the inflation trap - a decision made by his employer.
He took back control, and instructed the provider to invest in a global equities index fund.
If you want to switch out of the default fund - you absolutely can:
Log in to your 401(k) provider portal
Find your current investment allocation
Look at the available fund choices
Switch to:
Low-fee index funds if available
A custom mix that suits your risk level and time horizon
Recap
✅ Track down all your old 401(k)s using the 401k Mapper tool
✅ Decide: roll into an IRA or into your current 401(k)
✅ Use direct rollovers to avoid tax penalties
✅ Log in to each provider and review your investment choices
✅ Ditch high-cost defaults and switch to funds that match your risk and timeline
✅ One retirement engine, one clear path — zero spaghetti
💡 This is your first real act of ownership.
You’re no longer guessing what you have - you’re choosing what to do with it.
Next up, we’ll explore ROTH accounts - your tax-free growth account with total flexibility.
Up Next: Roth Accounts - Tax free investing that actually is real
Disclaimer: This content is for informational and educational purposes only. It does not constitute personal financial advice. Everyone’s situation is different — if in doubt, speak to a qualified, regulated financial adviser.