Should you keep your money in your 401(k) plan even after you leave your employer? You may have heard that its cheaper to move your money into an IRA, but thats not always the case. MyBankTracker explains why you shouldnt be so quick to move your 401(k) to an IRA, even if your new employer doesnt offer a 401(k).

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401(k) rules

By law, if you leave an employer and your 401(k) account has a balance of at least $5,000, you cannot be forced to take your money out of the account. You may leave it in this 401(k) for as long as the plan exists, all the way into your retirement years. You won’t be allowed to contribute more money into the account, but you will be allowed to reallocate your money into different investments available through the plan.

There are good reasons for creating a protection like this for 401(k) participants. Cost is one of the main reasons, but it’s not the only one.

Creditor protection

First of all, by law, creditors aren’t allowed to take your 401(k) money, whether you lose a lawsuit or go into bankruptcy. Your IRA money doesn’t have the same protection.

Penalty-free emergency withdrawals

Your 401(k) plan may allow you to make hardship withdrawals without triggering the 10 percent IRS penalty. These are situations such as buying your first home, paying for major medical expenses, paying to repair damage from a severe hurricane, and others. IRAs don’t offer this opportunity.

Professional investment monitoring

Every 401(k) plan is supposed to have a financial professional or firm monitoring the performance of every investment choice available to participants. If a fund performs poorly for a few quarters in a row, it’s supposed to go on a “watch list.” If it continues to perform poorly, it’s supposed to be replaced. You don’t get this benefit with an IRA.

Now on to costs, the area of where financial companies focus the most when trying to get people to roll over their 401(k)s into IRAs.

IRA expenses are usually higher than 401(k) expenses

You may hear that an IRA costs less than in a 401(k). This is rarely the case. However, it might be true if:

You don’t hire an advisor and pay an annual fee of 1 percent or more, plus some commissions earned when you invest in certain types of securities, like closed-end funds. You will, however, be in the DIY zone, so you will need to be financially savvy and pay attention to your investments.

You invest your IRA money exclusively in index funds. which have the lowest expenses of any type of mutual fund. Your 401(k) might have index funds, though, too.

You invest in individual stocks or bonds and pay a fee to buy them but don’t pay another fee until you sell them years later.

Your 401(k) plan is at a small employer that might be getting overcharged unwittingly, with exorbitant, unnecessary fees and expenses, and overpriced mutual funds. (Larger employers will have a financial advisor on their side to negotiate reasonable fees for them.)

Apart from those situations, 401(k) plans are, apples to apples, less expensive often much less expensive than IRA accounts. Here’s why:

In IRAs, you pay retail

Mutual funds come in different “share classes.” For example, there are “A shares,” which are retail-priced, and “I shares,” which are institutionally priced. The A shares and I shares are exactly the same in all respects except one: cost.

In an IRA, as an individual consumer, you pay retail (you get the A shares), which are the most expensive version. In many 401(k) plans, especially plans with 500 or more employees, the mutual funds are another share class (I shares or otherwise) that are priced below retail.

According to MarketWatch. the average cost of a retail-priced stock mutual fund ranges between 1.25 percent and 1.5 percent. For retail bond mutual funds, the average is between 0.75 percent and 1.0 percent. In contrast, according to the Investment Company Institute. the average cost in 2013 of a stock fund in a 401(k) plan was 0.58 percent. For a bond fund in a 401(k) plan, it was 0.48 percent. In other words, if you move your money from the 401(k) to an IRA, your mutual funds could end up costing you an extra one-half a percent. Is that meaningful?

Small fee differences can make a big difference in the long run

Say you have $20,000 in your 401(k), you roll it over into an IRA, you invest in mutual funds that cost half a percent more than they cost in the 401(k), and you keep the money for 35 years. As the calculators below show earning 6 percent vs. 5.5 percent (the difference caused by the extra expense) you would end up with about $1,500 less every year for 25 years.

Heres what youd earn at 5.5%.