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By Jason Stipp and Christine Benz | 04-24-2013 03:00 PM

Spring Clean Your Portfolio

Morningstar's director of personal finance offers tips for tidying up old 401(k)s, sweeping out stray investments, and taking stock of company stock.

Portfolio Makeover Week
Are you looking for tips on improving your portfolio? As part of Morningstar.com's Portfolio Makeover Week in May, director of personal finance Christine Benz will be making over five real-life portfolios to show how investors of all stripes may streamline and upgrade their holdings.

To be considered for a makeover, submit a request to portfoliomakeover@morningstar.com. Include a general description of your situation, including portfolio size, as well as your goals for the makeover.

If you are selected, your before and after portfolios will be featured in a Morningstar.com article, but you will not be identified by your real name. (Click here to see last year's portfolio makeovers.)

We look forward to hearing from you soon!

Note: Makeovers are not intended to be individualized investment advice, but rather to illustrate portfolio strategies that investors should consider in the full context of their own financial situations.

Jason Stipp: I'm Jason Stipp for Morningstar.

The notion of spring cleaning need not just apply to your housework; it can also put a shine on your portfolio and help get your financial house in order.

Here to offer some portfolio-related spring cleaning tips is Morningstar's Christine Benz, our director of personal finance.

Thanks for joining me, Christine.

Christine Benz: Jason, it's great to be here.

Stipp: You've identified a few areas where you can do some cleanup work in your portfolio. The first one has to do with any old 401(k)s that you might have lying around.

Benz: That's right. And a lot of people do have these small 401(k) balances that are sitting with former employers. And so I think if you're a person in that situation, you want to think about rolling over that money into an IRA.

And there are a couple of reasons to do so. One is that you get open architecture. So you can put almost anything inside of an IRA. You can look at a full menu of funds, stocks, whatever it may be. You are not stuck with that constrained menu of funds that your 401(k) plan might offer.

The other reason is that you do not have that layer of administrative fees that exists oftentimes with 401(k) plans. So you might have a little bit of ongoing expense to keep that IRA alive, but it certainly won't be typically as large as the administrative costs related to the 401(k).

One caveat, though, someone for whom this maneuver might not make sense, would be a person who might get sued, because the legal protections for IRA assets, depending on the state in which you live, might be somewhat less than what is available in the 401(k) plan.

Stipp: Another area you mentioned is cash holdings. You might have little pools of cash here and here and here. Those could be working harder for you if you'd think about cleaning that up a little bit?

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