How to Roll Over Your 401k

It might seem like a complicated feat to roll over your 401k into another retirement account. The fact of the matter is that it’s as simple as getting out of bed in the morning.

For starters, the word “rollover” is used to describe the process of transferring the money from one of your retirement accounts to another. Usually, you’ll take the funds for your ex-employer’s 401k account and roll them into your current employer’s 401k account. However, you can also roll money from an ex-employer’s 401k account into an IRA account. If your previous employer was yourself, then you can certainly roll the money from your solo 401k into a new account.

The most important rule to follow when you rollover your money from one account to another is to ensure that it’s a direct rollover. That’s when the old financial institution sends the money directly to the new financial institution. If the money passes through you while going between two institutions, especially if there is a prolonged delay in sending the money to your new retirement account, then the IRS might give you some grief for taking an early withdrawal.

Also, financial advisers say that the most secure way to move the money between two accounts is with an institution-to-institution transfer. That way, you won’t have to worry about the risk of a lost or stolen check.

Now that you understand the most important rule, just follow these simple rollover steps.

Know What’s in Your Old Account

Make sure you fully understand how much money you have in your old retirement account. Get the latest statement (it should be available online) so that you know the total value of all your assets.

Also, consider transferring everything to cash while you’re waiting for the rollover process to be finalized. That way, your account value won’t fluctuate with market swings.

Determine What You’ll Roll the Money Into

If you’re moving from one job to another, you’ll probably want to roll over your funds from your old employer’s retirement account into your new employer’s account. However, if you’ve decided that working for “the man” is no longer for you and you’ve decided to pursue self-employment, you might prefer to roll your money into an IRA.

Set up the New Account

Before you can transfer the money from your old account to a new one, you’ll need to establish the new account. Go through the process of getting your new 401k or IRA established so that you’ll have what is effectively a destination address for your rollover.

Rollover Funds

Once everything else has been put in place, it’s time to move forward with the rollover. Contact the customer service department of the financial institution that’s currently holding your retirement account and let the rep know that you’d like to initiate a rollover. More than likely, you’ll be able to at least start the process on the phone.

You’ll almost certainly need some info from your new account, though. That includes the account number and the address of the institution.

Once you’ve filled out the necessary paperwork and given the green light, your money should move from one institution to the other in a matter of days. Congratulations, you’ve rolled over your 401k.

You’ve been saving for retirement for quite a while. That’s why it’s important that you follow the very simple steps necessary when it comes time to roll over your 401k.