1. Stable value funds are not available
Most 401(k) plans offer stable value or guaranteed fund investment options as their safe choice, rather than money market funds. Money market fund yields have been far below stable value or guaranteed interest fund rates for many years. It is likely that yield differential will continue.
For conservative investors or 401(k) participants close to retirement, access to stable value/guaranteed funds during this low-interest rate period has been an absolute godsend. It is difficult, and most times impossible, to find stable value or guaranteed fund investment options available to IRA account holders.
As a result, an investor’s safe investment option in an IRA rollover account will likely be a low-interest money market fund or cash — not the best options.