When rolling over your 401(k) is the wrong move

Your old employer's plan is really good

The average 401(k) plan has just eight to 12 investment options, which restricts your freedom to choose the funds that best suit your investment goals.

If the few funds available were some of the best choices, this limitation wouldn’t matter so much.

But the funds in a 401(k) often suffer from active management, meaning a fund manager pursues a certain investment strategy, usually in hopes of beating the market but generally failing in the process.

Passively managed funds try to earn the same returns as the market and tend to succeed.

Before you decide to move your 401(k) assets from your old employer to your new one, compare the investment options available in each plan.

If your old employer’s plan has better fund choices than your new one, leave it alone.

If neither plan is great, a rollover is probably your best choice.

You want a plan that offers passively managed funds with broad exposure to domestic stocks and bonds and probably some international stocks.