Your 401(k) Rollover Might Be Sitting in Cash
- mackenziestussie
- Oct 23
- 2 min read
When you roll over a 401(k) to an IRA, it’s easy to assume the money is automatically invested and continues growing. But that’s not how it works. Once the rollover is complete, the funds typically land in a settlement account — which is just a holding area in cash. Unless new investments are selected and purchased, your retirement savings may sit idle for months or even years, missing valuable market growth.
Main Points:
The Cash Trap: Most custodians (like Schwab or Fidelity) require you or your advisor to choose how the money is invested. Until that happens, it remains in cash earning minimal interest.
Why It Happens: During the rollover process, the focus is on safely moving assets without triggering taxes. The custodian doesn’t assume your investment goals, risk tolerance, or time horizon — so they won’t invest for you.
The Cost of Delay: Even a few months sitting in cash can make a difference. Missing a market recovery or period of compounding growth can reduce your long-term return potential.
How an Advisor Can Help: An experienced advisor can ensure your rollover is not only completed correctly but invested in a portfolio that fits you — your goals, timeline, and comfort with risk. They’ll monitor the account, make adjustments as markets and your life evolve, and ensure your money doesn’t sit idle.
The Fix: Once your rollover is complete, confirm the funds have been invested according to your strategy. A proactive advisor helps make sure every dollar continues working toward your retirement goals.
Call to Action:
If you’ve rolled over a 401(k) in the past few years, take a moment to review it. Make sure your money — and your plan — are working as hard as you are.
Have questions or want a second look at your rollover? Schedule a meeting with us — we’ll help ensure your investments are aligned with your goals and every dollar is put to work.
