401k Rollover


IRA Rollover Introduction

You are eligible for a 401k rollover if you quit working either voluntarily or involuntarily. However, there are some plans that offer an in service 401k distribution that allows you to have a 401k rollover to an IRA while still working.

How to rollover your 401k to an IRA

There are four main steps for rolling over to IRA. They are;
- Opening an IRA (Individual Retirement Account).
- Request your plan administrator to provide the rollover paperwork.
- Fill out all the required details in the paperwork and send it back to the plan administrator.
- When the money arrives in your IRA, you can invest it where to deem fit.

Opening an IRA account with a financial institution that offers IRA services: a good financial institution would be a discount broker. Generally, you can choose an investment institution that offers the investment type you are looking for and that offer low trading fees and commissions.

Inform your employer about your intended 401k rollover: ensure that your employer pays the check to your selected investment institution. This type of transfer is referred to as a trustee-to-trustee investment and it does not charge the 20 percent tax withholding fees.

Make the right investment: once the money transfer is complete, your money will be in a low interest gaining investment account. However, you will have to invest the money in accordance to your asset allocation plan. Your broker determines the investment options that will be open for you. Nonetheless, ensure that you invest in passively managed ETFs, mutual funds or low cost well-diversified portfolio.

Investment Tips

- In most cases, it is advisable to rollover your 401k to an IRA after quitting your job. IRA reduces your administrative costs and offers rewarding investment options.

- If you are planning to retire at the age of 59 and you quit your job at the age of 55 or older, it is beneficial to wait and rollover your 401k when you are 59 years old.

- If your 401k bares employer’s stock, it is would advisable to consult with an accountant and see whether you can benefit from the net unrealized appreciation rules before rolling over 401k into an IRA.

- If you are planning a Roth conversion for your nondeductible IRA contributions, consider holding off your 401k rollover until an year after the Roth conversion is completed.
- The ideal place to rollover your 401k to a gold IRA is a discount brokerage firm with low or no trade charges or mutual fund Company that has low cost funds on ETFs.

Conclusion to Retirement Investing

The 401k to IRA is always the best rollover option. This is because, it allows to take advantage of an opportunity to lower your fee charges while gaining more flexibility. Remember to conduct a thorough research on the investment institutions before choosing the institution to work with. Moreover, you should be diligent and very keen when selecting the type of investment you want. If you are confused or unable to decide, it is always good to consult with a professional to assist and guide you through the process.

7 thoughts on “401k Rollover”

  1. Jeff, I have some questions about your video. 1. If someone still keeps
    their 401K in their old employer account, doesn’t the ex-employee have a
    benefit of getting “institutional” shares such as ARTMX. 2. Should one try
    to time a rollover process when their 401K positions are “higher” than the
    values in lower years? 3. What about expenses on the account? Will an
    ex-employee pay additional expenses after employment? If they rollover will
    they incur additional expenses in their RO acct?

  2. Hi Jeff, what is best for someone on disability if they were laid off. What
    is the best way to invest my 401k. I want something simple. Thanks

  3. Yes, you sure can. Your employer will probably require you to do a RMD
    before you rollover your 401k into your IRA.

  4. For “some” of the money, it could make sense. I would never advise anyone
    to put all their retirement into any one investment. People don’t realize
    that Gold is just as volatile as stocks. You pick the wrong time to get in
    and you could lose a bunch.

  5. How old are you? I would generally suggest to invest your money
    conservatively more into bonds than stocks. Be *very* careful with the
    bonds though (especially in mutual funds). You want to find bonds that are
    shorter term (avg. 3-5 years) right now until interest rates start to rise
    to normal levels.

  6. What about me? I rolled 11k from my 401k into an IRA with Edward Jones. Now
    I feel stuck. Broker is no help. He just wants his $50 per trade. Plus I
    have to pay an annual fee of $40. How can I get out? I’d rather have my
    money with a firm who doesn’t have all the expensive fees. Thanks

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