For plenty of people heading into retirement, the question is simple on paper but terrifying in reality: what happens to that 401(k) you've been building for decades? At 68, just one year away from clocking out for good, listener Susan Delferman sent that exact question to "Suze Orman's Women & Money" podcast.
"Hey, Suze, I'm sure you've probably answered this question before, but I've just started listening to your podcast. I want to move my 401k into something since I'm about to retire next year at 68. Where should I move it?"
Before Suze Orman could answer, her co-host KT jumped in. "I would roll it over to a Roth IRA."
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That was all Suze needed to hear. "But she has a 401k. She didn't tell you she had a Roth 401(k). She said she has a 401(k)." In Suze's world, that meant one thing: a Roth conversion wasn't the right move. Taxes would hit immediately, and Susan hadn't said a word about being ready for that.
From there, Orman unpacked the options. She reminded Susan that moving a 401(k) is not as simple as flipping a switch. "When you roll it to let's say an IRA rollover, and it would be a traditional IRA rollover, why? Because you don't want to owe taxes on it when you do so, and it would be a custodian to custodian rollover. You want it to go directly from your employer sponsored 401(k) into your IRA rollover at a brokerage firm."
And even that is just the beginning. Once the funds land in the IRA, everything is liquidated into cash. "When you do that, they have to liquidate everything that's in your 401(k), all the mutual funds and everything, and it's cash that will roll over. Now you're going to have to decide on your own how do you want to invest that money? Do you want to invest it all at once? Do you want a dollar cost average? So the question I turn back to you is how comfortable do you feel doing that?"
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That word — comfortable — kept coming up. Suze warned that once the account is moved, the retiree is on their own to pick investments, and the financial industry will be ready to pounce with advice that may not always be in the client's best interest. "Because I can tell you if it's a large amount when you roll it over to a brokerage firm, oh, you're going to have some financial adviser saying I think you should do this, I think you should do that, let's buy an annuity, let's do this, let's do that. So just depending on your knowledge, your comfort level, because remember the goal of money is for you to be secure."
So where does that leave Susan? Surprisingly, maybe right where she started. "And it may just be that you are secure with it in your 401(k) at your ex-employers where it happens to be invested. Maybe it's all invested in a Standard and Poor's 500 fund or something like that. So the question now reverts right back to you, girlfriend. Are you comfortable where it is, or do you feel secure enough for it to go to an IRA rollover and invest it?"
KT asked if she could simply leave the account untouched. Suze's reply was simple: "Yeah, yeah, as long as it's $5,000 or more, she can leave it at her ex-employer's 401(k) plan, which she may feel more comfortable with."
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Orman also gave Susan a middle ground: try rolling over part of it and see how it feels before making a complete move. But what she did make clear was that a Roth IRA rollover was not the right step — not at this stage, and not with the information Susan provided.
It was a reminder that retirement decisions are rarely one-size-fits-all. For Susan, the best answer was patience. For anyone in her shoes, chatting with a trusted financial advisor could provide the clarity needed before pulling the trigger on a rollover.
Because when you're 68 and staring down retirement, the last thing you want is to shift your life's savings into the wrong place out of habit or haste.
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