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Summary: Matt Hudak AAMS®, CFP®, CEPA®, Financial Advisor and Chief Investment Officer of CoCreate Financial, explains why the answer to whether you should roll over a 401(k) to an IRA (or a Roth 401(k) to a Roth IRA) is almost always yes, despite widespread internet misinformation driven by financial industry liability concerns and unresolved Department of Labor rollover regulation efforts stemming from Dodd-Frank. He compares 401(k)s as employer plans—limited investment menus, payroll-only contributions, vesting considerations, and stronger creditor protection—to IRAs, which offer far more flexibility, broader investment choices, consolidation of old accounts, and the ability to receive coordinated ongoing advice from a dedicated advisor. He notes potential downsides of IRAs if self-managed poorly, highlights myths about 401(k) fee advantages, and encourages viewers to evaluate rollovers in their specific context and seek professional guidance.
2026.05.08
Matt Hudak: Hi friends. We're going to talk about a really important question that a lot of people come to us with, and there's a lot of misinformation about it on the internet. The question is, should I roll over my 401(k) plan to an IRA? Or should I roll over my Roth 401(k) to a Roth IRA? What are the pros and cons? How do we unpack this? So we're going to dive in and talk about that in this video today.
My name is Matt Hudak. I'm the CEO of CoCreate Financial and really excited about this topic. When we look at this, a lot of the conversation, a lot of the information that you find online, has really centered around liability protection for the financial industry.
Back in 2012, when they enacted Dodd-Frank, they put in a directive for the Department of Labor to try to regulate rollovers, like they regulate the 401(k) plans even after they're outside of the employer plan. And this process of developing these regulations then has been caught up in court and in all kinds of different iterations of it that have been overturned, that have been thrown out, that have been really just not very functional. And so the industry as a whole has said, "we're going to say we're not going to give any advice on this. We're going to tell you it's better to leave it in the 401(k)," because that's the political risk that's on the firms to mitigate.
And they say, "I don't want to deal with violating a rule that doesn't exist yet." So they're more focused on that than really giving advice that's in the best interest of the person with a rollover, you.
So when we look at it, we want to look at a few different things. And we do need to evaluate this carefully in your context, but the short answer is almost always yes. You should roll over your 401(k) into an IRA. And there are a few reasons for that, but let's look at some of the differences and similarities before we dive into why you should.
One of the main differences with the 401(k) and the IRA is the 401(k) is an employer plan, and your IRA is your own plan, and that means a few things.
The IRA is very flexible. There's a lot that you can do in it. There's a lot you can do right. And in a lot of ways you can improve. There are a lot of ways that you can also go wrong and misstep in an IRA, especially if you're managing it on your own and, and you're not somebody that's built up the knowledge and experience with investing.
You can make a lot of unwise choices that maybe the 401(k) would prevent you from doing, but the 401(k) also, as an employer plan, has more limitations within it, and it has fewer different products that you can have. It also vests, which means that some of the money that your employers contributed as a matching contribution may or may not be yours yet while you're still working for the company.
Now, if you leave and roll over to an IRA while you're not fully vested yet, you might lose that vested amount. And then if you go back to work for that employer again, you might have to start over in that vesting schedule. And how that works is probably a great content for another video 'cause we don't have the time to dive into that here.
But when you're looking at that mix, you want to make sure that you're not planning to go back to the employer in the relatively near future because that could cause some problems to roll it over. If you're watching this video, you probably already know that you have to leave your employer in order to do that.
Or sometimes you might have that provision if you're getting ready to retire and you're in your sixties. You can sometimes roll over that balance to kind of get you started in the IRA and make your process of retiring more efficient. They call that an in-service distribution. And some plans offer that, some don't.
But within the 401(k) structure you have higher contribution limits, but you can only contribute through payroll. And the IRA, you don't have quite as high a contribution amount that you can make each year. But if you're not making the contribution to the 401(k) because you're not employed with that employer, you can't make that contribution anyway. So, the 401(k) has a higher limit of liability from creditors. So that you can't have a creditor when you owe money to someone, they can't come and collect that out of your 401(k).
In the IRA, you still have a million dollars of creditor protection. So it's still a substantial amount if we're looking at that IRA balance. But if there's a debt issue, we need to look at that and make sure that we're cognizant of what that looks like in our strategy for doing the rollover. Okay. So the biggest reasons to do this rollover really have to do with investments and advice. So when you're doing your research, you'll see online things about investment fees being different and maybe being less or negotiated down in the 401(k).
This is really just a myth. It depends on plan to plan. But often what we do see in 401(k)'s is that they have very low expense funds that are often low expense for a reason, they're subpar, their performance isn't great. And the quality of management is not very high. And the way that they get sales as a fund is to get them into 401(k) plans so that people have these limited choice menus and they'll buy these funds because it fits a category.
And a lot of times, employers or plan fiduciaries say well, I can meet my obligations by choosing something that's low cost, and they limit their search to things that tend to be low cost, and having a couple of things that are in a different investment mix, a different type of sector or, you know, something might be global, something might be small and aggressive or whatever.
And they pair a few things, but they tend to look at costs and other features of these funds. And we end up with these subpar mixes. They're just not portfolios that a professional investor would put together. They just aren't, and there's not enough choice within the 401(k) plans oftentimes to meet, even if they are good, to meet an investor's needs to meet one of our client's needs. So we're looking at saying, well, what do we do here? We want to be mostly in U.S. companies that pay dividends and there's not even an option in the 401(k) for that. Maybe we'll go with something that's the S&P500 index fund when we're investing in the 401(k) instead.
But then the S&P 500 index fund is not actually a diversified investment. It's 40% large cap tech stocks, which right now happen to be in a significant bubble as we're recording this. So that's actually a high risk momentum investment. And the 401(k) plans don't have the ability to account for those types of risks.
Whereas in the IRA, we can do a wide spectrum of things. Now, you don't want to go from a limited menu of investments that probably aren't going to get you into a lot of trouble. In your 401(k) plan to an IRA that you're managing and maybe doing highly speculative things like investing in Bitcoin.
Or there are some ways that you can own real estate in IRAs that have some pretty massive logistical drawbacks that create a pretty intense risk for you if you're not very very methodical in how you've evaluated that. So there are things that you can do again to misstep in these IRAs if you are not careful, if you're managing them yourselves, especially because if you're working with a professional, they should know the things that are going to cause problems and be aware of those and how to avoid those things. But within that spectrum, within an IRA, you can also own dividend yielding stocks. You can own tech stocks, you can own bonds, you can own individual bonds, you can have funds, you can have ETFs, you can have really any kind of investment that's out there in some form.
And there are a few things that are outside of that scope, but they're not mainstream types of investments that you can't own inside an IRA. So you have a lot of choice and a lot of ability to manage this in a way that works and you can hire professionals to get ongoing advice and to really have a financial plan that's coordinated to meet your needs.
Whereas in the 401(k), some of them do now have like a one 800 number where you can call a certified financial planner professional to get some advice on what you're thinking. But that person that you're calling doesn't really know your situation, like a financial advisor that you're hiring that's in your community, that's engaged with you, that knows your kids' names and knows how long you've been married, that understands the community, the type of neighborhood that you're in, where you're going, what your business looks like, that knows your tax situation, your estate plan.
So you don't really get the same kind of advice in a 401(k) that you can get outside of that 401(k) when you're working with a professional advisor that's dedicated to you and has an ongoing engagement. And then the other thing is with IRAs, you can roll over your 401(k) from the job that you just left into an IRA.
You can roll over the 401(k) from the job you left 10 years ago into the IRA and you can keep your investments consolidated. And sometimes you can even save in other types of buckets, like other types of accounts. We talk about these things like buckets here at our firm 'cause we like to be simple and speak in plain English, but you can put it into an account that you can save in parallel to the IRA too.
You can save where you can access it before retirement. So there are lots of different things you can do, but you can keep everything in one place. If you do these rollovers, and you're not going to walk into your retirement era in life or your next chapter and say, “I don't know where all my money is. I know I had this 401(k) from this old job, but I don't know how to find it.” That's a common thing. Or you'll be coming in and saying, I found this 401(k) from 30 years ago that I didn't know was just sitting in cash and could have quadrupled over the 30 years or whatever it would be in value. Again, that's not guaranteed, right.
Performance has risks and all of those things, having an investment grow, but you didn't realize that it was sitting there in cash or maybe even an unclaimed property somewhere. These are common things that we encounter with people is that they've lost assets from the past and it actually has a significant negative outcome for the client. When we see those things happen, in most cases, sometimes you find a hundred thousand dollars and you say, that's pretty sweet that I just realized I had this money that had been growing since I was 22. And that was like that, that's awesome. But that's the uncommon side of it.
More often it's things weren't managed appropriately because you forgot about them. And so keeping things consolidated, keeping things in a place where you can get professional advice really has a dramatic advantage. And most of the information that you see on, you know, the pros and cons of doing a rollover are really oriented around satisfying this regulatory burden and the liability that's been put on the financial industry to try to tell you you should keep money in the 401(k)s because they don't really want to say roll it over and then find out that they had some requirement that they didn't check on a form or something like that down the road. So there's really been really poor advice on this over the last 15 years or so. So I really want to encourage you to think about that. The fees are generally very similar.
Anything can be compared. It's apples and oranges. You might spend a little bit more on one side or the other in a specific context. But compare all these things, get advice, reach out to us. We're always happy to talk to you about the actual implications of your decision and what that means and help you make that decision from a really grounded, rooted, wise perspective. I'm excited to talk with you about this. Give us a call. We're always available to help you make these decisions. And excited. Take care.
Summary:
Matt Hudak AAMS®, CFP®, CEPA®, Financial Advisor and Chief Investment Officer, and Christa Hudak CFP®, ChFC®, CKA®, Financial Advisor and Chief Planning Officer for CoCreate Financial, explain their approach to financial planning by aligning financial decisions with a client’s core values, beliefs, and convictions to create more long-term satisfaction than traditional math-only goal setting.
2026.05.07
Christa: Thank you for joining us today. I'm Christa. And this is Matt. And today we're going to be talking about how we approach helping you align your financial planning, your financial decision framework with the values that you hold dear, and how and why that's important to make you truly successful in the long term.
Matt: Yeah, and what we found is when you do this, you really have a lot more satisfaction in your outcome across the board. We've spent a lot of years kind of following a traditional approach to thinking about financial goals that's really just purely math based.
And what we found is that it doesn't really lead you to the most efficient outcome in terms of what you internalize. Oftentimes people are not saving enough and they feel afraid of the future, or they're saving too much.
And they're afraid to spend it when they really should be using that for something that's meaningful 'cause you can't take it with you.
Christa: And I'll just add like these conversations that what we're going to get into, they're where things really come alive and they're the hard part, because if you were to say, you know, I want to buy a house that's worth this much in this many years, that's just a math problem. That shouldn't be hard for us to figure out.
Especially as financial experts who can run the time value of money calculations. That's not a hard question. The hard question is "how do we get the goals right and how do we line this up well over time?"
Matt: Yeah. And when we're looking at this, we look at a few different things and traditionally this has been like we've talked about math-based calculations to say how much are you going to have when you're long gone? And how do you make it last for forever? And then just give it this pile of money to your heirs. And hope that they do things well with it that they live well, maybe even in a way that you didn't. And what we look at is there are really three different types of capital that we have to plan for at the same time.
The first one of these is your financial capital, and that's pretty obvious. It's your money, it's your debt, your assets, your house, your cars, your cash, your stocks, all the different things that you own. Your business, if you have a small business. This is your financial capital. It's the stuff we can measure and calculate.
We have to make a plan for that. We have to make it last. We have to help you deploy that in the present as well. The next thing that we have is your social capital. This is really your influence. This is the influence you have in your family, in
Christa: your community,
Matt: in your community, in your church, in your business, with your employees, with your employers. You have influence across a wide range of individuals.
How do you make the most of that? How do you impact those people personally? How do you leverage that as well to have more impact in your community and to live a life that's more fulfilling in your sphere based on your beliefs and values and convictions, which we'll talk about that a little bit later.
And the third type of capital that we have is sorry, I already said social capital, spiritual capital. And this is, what are the lessons these deeply spiritual things, that you want to pass on? What are the beliefs that you think are important that have shaped who you are? These look different for many of us. Our spiritual capital is very significant in our lives. We really value our spirituality and our faith, and it's a main driver for us. And we find that's true for most people of faith. But even if you're not a person of faith, you have this spiritual capital. How do you want to influence people on that deeply personal and spiritual level and shape those people?
What are those things that you can give? So when we're looking at these we don't want to save these up until you're gone. If you look at things like social capital, spiritual capital, it's really easy to see that it doesn't do any good if you just wait until you've passed away, and you've never been kind to anybody, or never cared or showed up for somebody, and you write them a letter after you've passed and say, you know you're going to receive this when we're at my funeral. It doesn't do anything. Right. It's obvious to us that those you can't pass after the grave, but financial capital is also something that you need to distribute and balance over the course of your lifetime. We don't want to see any of our clients starve in retirement, but we also want to make sure that our clients are able to live here and now and do the things that are meaningful and impactful all along throughout the course of their life.
Christa: And also, when we encounter people that have excess, you know, they've been good savers, they don't have extravagant lifestyles, and we're looking at the situation and there is in fact excess, we want to give them the opportunity to ask the question, how do I want to use this or distribute this during my lifetime, instead of just saying, well, they're happy with living on a lot less than their portfolio can generate, and it'll just go into their estate. But to give them that opportunity in the present as we assess things to say, what do you think the best choice of using this money is?
Matt: And it's a lot more fun to take that approach. So we really hope that we can engage these different types of capital along the way. And we use a values and beliefs filter to really help identify how that works.
Christa: Yeah. So kind of shifting to another place in this diagram that we'll have up on the screen, we have these concentric circles, and in the financial industry we tend to live on the outside of the circle and we want to talk about things like, you know, what's your family situation? Are you married? Do you have kids? Who are the people involved here? What do you do for work? How much do you pay in taxes? What other components are things that we need to fund or things that interact with the finances? And we tend to live just in that outside sphere of conversation. But what we find is that to really understand those things for our clients and to really drive forward on a holistic plan, we have to start at a much more core level, which is, what are your beliefs, values, and convictions, and how do those drive the things that are most important to you?
Matt: Going from that tangible outer circle to sort of almost through the circle that defines our passions to what's really at the core of those.
Christa: Yeah, absolutely. Because we find that this changes things and it also helps explain the things that are most important to us, and also filter out the things that maybe are not so important, and we can all come up with all kinds of goals, right?
And 'cause so often we just say, well, what do you want? And you're like, well, I can start spitting off some things that I think would be cool. And if you really lean into those, you'll decide that they're really important, and maybe they are.
But if we don't ask the question of why they're important, we can find ourselves going in the completely wrong direction.
Matt: Yeah. And whether those are career goals or recreation goals, travel types of goals that might be family, a family vision that you have, as we ask those questions of, well, what's driving behind that?
What's the driver behind that? What's the why? We have to do that even sometimes a few times.
Continuously. Yeah, continuously. And really, really dig. Dig down deep to say, you know, what are the pieces that aren't changing about this?
You know, when you get to the place of having that new house, what's still the same because once you get to your dream house, you have to figure out the next chapter and reinvent yourself. You have to have a new vision and a new dream. So there's something that has to be really more centered to align all of your goals so that you can be consistent and really achieve those things.
And one of the things I think that we found is a lot of these values, these beliefs, these convictions, these things that are core to our ourselves, they actually don't take a lot of capital.
They're often free.
Christa: Okay.
Matt: If you really care about having a healthy marriage, if that's a value to you that doesn't take money. Sure it's nice to go out to dinner or it might be nice to take a vacation with your spouse or do something. That's not to say that money can't add value. Your resources, if they're used well can bring some satisfaction to those, especially temporally.
But you know, in our marriage, we're married, by the way, if you don't realize that already. But in our marriage we get to spend time with each other. We get to work on our communication skills and we get to pay attention and actually look internally and say, am I valuing Christa? And that doesn't take anything. That's free for me to build good habits in our marriage and to pay attention. So, a lot of these beliefs and values and convictions that we find people have they don't take a lofty savings plan to get there to accomplish it. It's really about being disciplined and focused on the things that matter in the present, and then allowing the resources and the ways that you're using the capital to augment those and amplify your ability to be successful in those things.
Christa: Absolutely. And the other reality that we face is that goals are simultaneous, not sequential, and often in competition with each other. So, one of the things that comes up a lot that we see all the time is, you know, we'll have business owner clients who will have ideas or want to go on new ventures for growing their business, and they're really excited about those opportunities within their business.
And then they'll also say in the same conversation, and I want to spend more time with my family. And those are both very good things to be growing your business and spending time with your family, but sometimes they're in conflict with each other and that's just the reality of it. And there's no one size fits all answer to how to divvy that out or how to make that work.
But, to be honest, where we have to say we hold these values, and to get really real about what those are and what the most important things are, what the most important things are in different seasons, and be willing to say, okay, these values exist. These are the different things that I want to do. How do I align these up so that both can be accomplished when there is this tension of, you know, one seems to infringe upon the other?
Matt: And how do you reconcile that? To riff off that example, you might have a business idea that has a really positive impact in your community and that might be really, really important to you. And that might align with your values of having a really positive community impact of kind of, hopefully it's a little more specific than that 'cause that's pretty generic. But so you're looking at that, but you're also saying, I want to be there for my kids at this stage. Those are both really important and good things, and you might lean toward solving that in some sort of chronological prioritization structure. Or you might prioritize that by impact and say, well, I am going to go into work on the community impact and hope that's a good example for my kids.
That's social capital and spiritual capital that you get to distribute by giving a good lesson for your children. Or it could be I'm going to find a way to bring my kids along in that impact. And there are different ways that you can arrange that, but without identifying both the tension and then the value drivers behind them, you can't really reconcile those very well.
We find that this values alignment has so many different dynamics that it brings. Spending problems, those are usually heart condition problems. Those are usually, I want some to satisfy something that I don't feel like is being satisfied right now so I'm going to look at a thing to meet a need that I have that's really intrinsic.
And we get into these habits of overspending. We see marriages where people come in and they're not in alignment and they're having trouble talking about the finances. Well really, if we get these values alignment issues figured out, if we get them on the same page as one another on these core things, then the financial pieces start to fall into place a lot more easily.
And so we're able to work through those issues too. So this is a really powerful tool as we're going through and looking through this with people. We're really, really excited about the opportunity to walk through some of this journey with you. It takes a lot of work, it takes a lot of time.
We don't get to discover these things overnight about the people that we're working with. It's a long process of asking those why questions. So, we're really excited to explore this with you and to sit down and talk through these things, figure out what your financial capital looks like and your social capital, your spiritual capital, these beliefs and values and convictions, how these can drive your purpose, your impact, and lead you to a far more satisfied end result in your financial life as you go through your whole financial life.
So we look forward to meeting you here in our office and talking through this more.
