Don’t Make This 401(k) Mistake That Could Cost You Big
A big mistake people often make with 401(k)s is having multiple savings accounts open at the same time through various employers. Instead, do this.
April 2 2026, Published 3:14 p.m. ET
One of the best ways people prepare for retirement is by opening traditional IRAs and 401(k) accounts. These retirement accounts allow you to save money as you earn, so when the day comes for you to actually walk away from the workforce, you have a solid nest egg sitting there waiting for you to live off of.
While 401(k)s often come with many perks, like your employer matching what you put in and allowing you to lower your taxable income at the end of the year by whatever you’ve contributed, there’s a pretty big mistake many people make when it comes to these retirement savings accounts. Thankfully, it can be avoided once you know about it.
Keep reading to find out which 401(k) mistake you don’t want to make that could leave tons of money on the table for you during retirement.
Don't make this 401(k) mistake that could cost you tons of money.
A big mistake people often make with 401(k)s is having multiple savings accounts open at the same time through various employers. Because most people work for more than one employer in their lifetime, and many of them open a new 401(k) each time they start with a new company, they wind up with several 401(k) accounts floating around, some they might even lose track of.
According to Fidelity’s 2026 State of Retirement Planning study, Americans reported having an average of six employers over the course of their careers, and 23 percent of those say they have retirement accounts with both past and current employers.
It’s hard enough managing one retirement account, let alone two, three, or even four!
Aside from it being difficult to keep track of, since each account likely comes with its own login info, statements, and forms, there are several important reasons why you don’t want to make the mistake of having multiple 401(k) accounts.
First and foremost, you might be paying fees for each retirement account that is open and not even realize it. Vanguard points out that some 401(k) accounts may include maintenance fees, meaning those charges could be applied to one or more of your accounts, essentially reducing the amount of money you’re hoping to live off someday.
And when that time comes, you can bet it’s going to be challenging trying to withdraw money from each 401(k) account and keep track of what’s left. That’s because the IRS does impose what are called required minimum distributions (RMDs), which generally require account holders to withdraw money from their retirement accounts each year, typically starting at age 73.
Basically, this is how the government begins collecting taxes on the money you’ve been saving. It’s worth noting, however, that this applies to traditional retirement accounts, not Roth IRAs or designated Roth accounts, per the IRS.
Aside from those reasons, it’s also a good idea not to have multiple 401(k) accounts open because what if you forget about one? Say you worked for a company in your 20s that offered retirement matching benefits, and then you switched jobs three more times. By your 60s or 70s, you might have completely forgotten about that first account, which firm is holding it, and what your credentials even are to access it.
So, what do you do instead of having multiple 401(k)s? Here’s one solution.
Consider consolidating multiple 401(k) accounts into one.
Rather than keep multiple 401(k) accounts open, risking paying fees to maintain them, and potentially forgetting about one, consider consolidating your accounts into a single 401(k). So when you start with a new employer, have the money from your previous employer rolled over into your new employer’s 401(k) plan. This way, all your retirement savings are traveling with you as you switch employers, making it easier to monitor.