How to roll over your 401(k) — In Five Simple Steps

How to roll over your 401(k) in 5 Simple Steps

How to roll over your 401(k) — In Five Simple Steps

When you take a 401(k) from an old job, you have several options on what to do with it. Many people chose to convert their 401(k) into an IRA.

Why a 401(k) rollover sometimes makes sense

Rolling your 401(k) to an IRA can offer some potential benefits, including:

  • A more diverse investment selection than a typical 401(k) plan offers
  • Lower cost investments (the cost comparison will depend on your employer’s investment offerings)
  • Consolidating multiple old 401(k) and IRAs into one account for greater simplicity and a clearer retirement picture moving forward.
  • A personalized financial roadmap: If you utilize a financial advisor to roll over your IRA, they will typically provide you with a plan that shows when you could have the option to stop working and how much potential income you could receive in retirement.
  • Reliable retirement income: 401(k) plans do not provide reliable income; however, an IRA invested in the right product will.

Leaving money in a 401(k) has some benefits, too, including the fact that your 401(k) is better protected from creditors. Also, generally you can take a loan from a 401(k), which isn’t possible with an IRA (though IRAs offer some loopholes for early withdrawals).

If you’ve decided a rollover IRA is right for you, here’s how to make it happen.

Call For More Assistance: (720) 259–6256

How to start your rollover

There’s a right way to roll over your funds from a 401(k) and a wrong way. You don’t want the 401(k) provider to cut a check in your name, and you don’t want to cash out your balance. In both scenarios, you’re at risk of owing up to a third of your balance to the IRS.

Take these five steps to roll over your funds without incurring any unpleasant tax surprises:

  1. Decide on a Roth or a traditional IRA. If you roll into a Roth IRA, you’ll owe taxes on the rolled amount. If you want to roll over your funds without incurring taxes, stick with a traditional IRA. (There’s an exception: If you’re rolling from a Roth 401(k), you won’t incur taxes when you roll to a Roth IRA.)
  2. Open a rollover IRA account. Opening a rollover IRA account is easy and fast. Once you pick a provider, they’ll ask for some information, including birthdate and Social Security number.
  3. Ask your 401(k) plan for a “direct rollover.” These two words are important: They mean that the 401(k) plan will cut a check directly to your new IRA account, not to you personally. Some companies will send the rollover check directly to you made out to the new IRA provider and then add your name as an FBO. This works great and will not result in any taxes as long as the money is deposited into your new IRA within 60 days. Here’s an example: rollover check is made out to Transamerica FBO: John Smith. In this case, Transamerica will accept the check and deposit it into John Smith’s IRA. Because John never cashed the check himself, he’ll pay no taxes on this direct 401(k) to IRA rollover.
  4. Choose your investments. Your 401(k) funds will enter the IRA as cash, so you’ll need to invest the money. You can choose a provider who will pick your investments and manage your money for you, or you can pick your investments and manage them yourself.
  5. Have a plan for the future. Make sure either you or a financial advisor calculates how much potential income your new IRA will provide when you’re ready to retire. Then stick with the plan. Keep a long-term view of the stock market. Don’t get caught up in the day-to-day news, noise and market gyrations. Taking a long-term view of investing and staying focused on your retirement goals gives you the best chance to achieve the lifestyle you’ve always envisioned.

How to choose your IRA provider

Finding the best account provider starts with knowing your investing style — whether you’re a “manage it for me” type or a DIY type. Many people prefer to have a team that includes an experienced financial advisor who can create a roadmap and do calculations working for them. Having an experienced team and a financial coach can be beneficial over time. However, if you’d like to go it alone, you’ve always got that option.

Click the link below to learn more about the 4 options available to you with regard to your 401(k) and to see how we can assist you with your 401(k) rollover.

Or Call This Number For More Information and Assistance: (720) 259–6256

Click Here: 401(k) Rollover Information Guide





Securities and Investment Advisory Services offered through Transamerica Financial Advisors, Inc. (TFA), Member FINRA, SIPC, and Registered Investment Advisor. Headquarters: 570 Carillon Parkway, St. Petersburg, FL 33716. Phone: 770.248.3271

Neither Transamerica Financial Advisors, Inc. nor its representatives may provide tax or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors regarding their particular situation and the concepts presented herein.


Transamerica Financial Advisors In Denver

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Are you looking for information on a financial advisor in Denver? We can help guide you through your retirement planning.

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