What to Do Before the Market Decides for You
That 401(k) from the job you left a few years back — it’s still out there. Still invested. Still riding every market swing, quietly, without you paying much attention to it.
And if you’re closer to retirement, the math gets more uncomfortable. Because at a certain point, you don’t have time to wait out a bad year.
Here’s the thing most people don’t realize: you have options. Real ones. And a rollover — done right — can do something your 401(k) probably can’t: protect what you’ve built and make it work on your terms.
See what your 401(k) could become
Why a 401(k) sitting still isn’t actually sitting still
A forgotten 401(k) isn’t neutral. It’s invested — which means it’s exposed to market risk, accumulating management fees, and drifting further from your actual retirement goals every year. Leaving it alone isn’t a strategy. It’s just delay.
And for those nearing retirement, market exposure at the wrong time is one of the biggest risks most people underestimate. A significant drop in the two to three years before — or right after — you retire can permanently reduce your lifetime income. Financial planners call it sequence of returns risk. Most people call it a nightmare.
Option 1: Roll it into an annuity — and guarantee your income for life
An annuity is one of the only financial tools that can promise you won’t outlive your money. When you roll a 401(k) into an annuity, you’re converting a pile of savings into a reliable income stream — for life, regardless of what the market does.
There’s no guessing how long your money needs to last. No watching the news and recalculating. Just a predictable amount, arriving on schedule, for as long as you live.
For anyone within ten years of retirement — or already there — this kind of certainty is worth taking seriously.
Option 2: Roll it into an IUL — protection, growth, and flexibility
An Indexed Universal Life policy (IUL) takes a different approach. Your rollover funds build cash value tied to a market index — so you participate in market growth — but with a floor, meaning your account can’t go backward when the market drops.
On top of that, an IUL provides a life insurance benefit for your family and lets you access the cash value as tax-free loans when you need it. For a down payment, a business, a health emergency, or retirement income — it’s flexible in a way a 401(k) simply isn’t.
If you’re younger — say you changed jobs at 35 and have an old account just sitting there — an IUL rollover is worth a serious look. The earlier you start, the harder that money works.
How a rollover works (it’s simpler than it sounds)
A direct rollover from a 401(k) to an IUL or annuity is a clean, tax-free transfer when done correctly. No penalties, no surprise tax bill. The funds move from your old account into the new vehicle without ever passing through your hands.
The key word is “direct.” Your old plan administrator sends the funds directly to the new account. If you take the money yourself first, you’ve got 60 days to redeposit it or the IRS treats it as a distribution — and that comes with taxes and penalties. Work with an advisor and do it right the first time.
So which one is right for you?
It depends on what you’re trying to protect. If guaranteed income for life is the priority — annuity. If you want growth potential, protection from loss, and flexibility to access funds — IUL. If you’re close to retirement, the annuity’s certainty often wins. If you have time on your side, the IUL’s compounding power is hard to beat.
What’s almost never the right answer? Leaving it where it is and hoping for the best.
Not sure which direction makes sense for your situation? That’s exactly the conversation we’re built for. Let’s talk through your options.
About the author: Shelia Gerstner helps individuals and families navigate retirement planning, insurance, and financial protection with clarity and zero pressure.
