If you’ve recently left a job, you may be wondering what to do with your 401(k) account. One option is to do a 401(k) rollover. A 401(k) rollover is the process of transferring funds from your former employer’s 401(k) plan to an individual retirement account (IRA) or a new employer’s 401(k) plan. Here’s how to do a 401(k) rollover.
Determine if a rollover is right for you
Before doing a 401(k) rollover, it’s important to determine if it’s the right option for you. A rollover may be a good idea if you want to consolidate your retirement savings, have more investment options, or have lower fees. However, if your former employer’s 401(k) plan has exceptional investment options or low fees, it may be better to keep your funds in that plan.
Choose an IRA or new employer’s 401(k) plan
Once you’ve decided to do a rollover, you need to choose where to transfer your funds. You can transfer your funds to an IRA or a new employer’s 401(k) plan. An IRA gives you more investment options and more control over your investments, while a new employer’s 401(k) plan may offer lower fees or better investment options.
Open an IRA or a new employer’s 401(k) plan
If you’ve decided to transfer your funds to an IRA, you’ll need to open an account with a financial institution that offers IRAs. If you’ve decided to transfer your funds to a new employer’s 401(k) plan, you’ll need to enroll in the plan and complete the necessary paperwork.
Request a rollover
Once you’ve chosen where to transfer your funds, you’ll need to request a rollover. You can do this by contacting your former employer’s plan administrator or your financial institution. They will provide you with the necessary paperwork to complete the rollover.
Complete the necessary paperwork
To complete the rollover, you’ll need to fill out the necessary paperwork. This will include a distribution form from your former employer’s 401(k) plan and an account application for your IRA or new employer’s 401(k) plan.
Wait for the funds to transfer
After you’ve completed the necessary paperwork, you’ll need to wait for the funds to transfer. The transfer process can take anywhere from a few days to a few weeks, depending on the financial institutions involved.
Manage your new account
Once the funds have transferred, you’ll need to manage your new account. This includes choosing your investments and monitoring your account’s performance.
Doing a 401(k) rollover can be a smart move if you’re looking to consolidate your retirement savings, have more investment options, or have lower fees. To do a rollover, you’ll need to determine if it’s the right option for you, choose an IRA or new employer’s 401(k) plan, open an account, request a rollover, complete the necessary paperwork, wait for the funds to transfer, and manage your new account. With the right approach, you can successfully do a 401(k) rollover and take control of your retirement savings.