I’m a fan of flexibility and I like having my options as wide open as possible. That’s why I don’t like rolling over a 401(k) into another 401(k).
After leaving my first job, I immediately rolled my 401(k) into a Vanguard mutual fund account. I felt that Vanguard would give me plenty of options while keeping my costs low. If you elect for electronic delivery of prospectuses and statements, you will pay little to nothing in administration fees. With the costs low from the fee perspective, I felt I had enough options to choose from in the funds department (and they are cheap!).
What happens if you roll it over into a new employer’s 401(k)? You have a smaller subset of options (some plan administrators are larger brokerages like T. Rowe Price), higher fees, and your money is essentially trapped there until you leave your job and roll it over again.
So, before you roll your 401(k) into yet another 401(k), think carefully about it… you might find a better option.