Your 401(k) Rollover Might Be Sitting in Cash

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.