401k question?

Question

i have a 401k through a company that i don't work for anymore, i'd like to turn the money into an IRA or some other type of savings, but i'm not sure how to go about it. i'm not even sure of the correct questions to ask the company to get the paperwork to do this. as you can see i'm not very savvy when it comes to financial matters so any help from an experienced financial person would be greatly appreciated. thank you!

Answer 1

go to your bank and set up the Ira then tell them you need to have the forms for rolling in a 401k. But you might get better returns leaving it in the 401k in most cases

Answer 2

Is your 401K with the company itself, or is it invested somewhere else? If its invested somewhere else, you don't necessarily have to move it. Just make sure that the address gets changed, so that you get your statements.

If it is with the company, you can roll it over into an IRA. Many employers just automatically contact you about doing this when you leave. Contact Human Resources and ask them how to get a check for your 401K balance. You will have a limited amount of time between when you get the check from them and when you deposit it somewhere else, so you may want to do your research now. I have retirement money in mutual funds with both Vanguard and Fidelity and have done well with both of them. (two different employers...) There are some other companies that you should consider too. Then you have to pick a fund (yeah, its complicated). Any company that you talk to will give you some guidelines about which funds are safer and which will get you bigger returns. It would be a good idea to talk to a financial planner or accountant, to make sure that you put your money in the place that is right for you.

Do lots of reading before you get that check, and then roll the money over. Don't deposit the check into your regular accounts, just put it right into the new retirement account. You pay big penalties if the money doesn't go into an IRA, and you don't want that.

Answer 3

Decide on a financial institution where you want to keep your rollover IRA. Could be a bank, in the form of CDs, or at a brokerage (Merrill Lynch to Schwab to Vanguard), in the form of mutual funds and/or stocks.

In addition to filling out the New Account form, the financial institution will let you fill out a Change of Custody form, which is a request by the financial institution to the planner of your 401k to move the assets from your 401k to the rollover IRA. This eliminates the situation where the 401k planner issues a check to you of your 401k assets and you have 90 days to deposit it into a similar financial vehicle (e.g., another 401k, IRA) w/o tax penalty.

I did this when I was laid off by my employer 3 yrs ago. As soon as my old 401k's planner unfroze my assets, I opened an account w/ Vanguard, filled out the New Account and Change of Custody forms, and Vanguard did the rest within days.

Good luck.

Answer 4

You definitely want to do a 401k rollover. This allows you total control within an Individual Retirement Account (IRA). Additionally, it provides you with a much larger selection of investment vehicles that may be more suitable for your specific needs.

Due to your inexperience you may want to consult an investment advisor. They can be invaluable when it comes to service and choosing the proper vehicle.

If your comfortable choosing your own investments you could go to a no load company like Vanguard funds, T. Rowe Price, etc. and save a few basis points.

This article should help with your distribution questions:
http://themoneyalert.com/401kdistributiondelimas.html

Good Luck.

Answer 5

Talk to the investment company that manages the 401K, and tell them you want to use the money to create an IRA. If you keep it within the company, they probably will bend over backwards to help you. Just be sure you tell them that you want this to be a non-taxable transfer, so that you don't get hit with early withdrawal penalties. They will probably assume that this is what you want, but you should explicitly say that just to be sure.

Answer 6

You can convert it to a IRA, but to make sure it is done right I would see a financial advisor, like at your bank, or I use Edward Jones for all this type of work. Also depending on your age, you may want to consider a ROTH IRA.

Good luck.

Answer 7

You can do a 401(K) "rollover" to an IRA. It is important that it be done correctly to avoid any tax liability. T Rowe Price (www.troweprice.com) is an organization that can assist you easily with doing this and they have lots of investment options to choose from.