If you’re wondering whether or not you’re eligible for a 401k rollover IRA account, chances are you’re currently in the process of changing jobs or have recently been encourage opening a privately held IRA. In most cases, 401k accounts are tied to employment and are offered as a benefit by the employer to attract and retain good employees. But because 401k are still individually held, when you leave an employer – either by your choice or theirs – you can generally do as you wish with the money in your 401k account.
After leaving a job, your first thought when it comes to the money in your 401k should be to leave it alone until you know exactly what you want to do with it, and you’re sure all the necessary arrangements are in place to begin the rollover process. You’ve worked hard for your money, and hopefully it’s worked hard for you and grown with interest and investment earnings. The last thing you want to do is lose part of that money to unnecessary fees, taxes and penalties.
When you hold an existing 401k account, you’ll be happy to find that you’re eligible for a variety of different 401k rollover options. For example, there are some types of IRAs that can only be opened by business owners, but there are others that can be opened by individuals. A financial planner or tax consultant can help you compare all of the different types of IRAs and retirement savings options you have to help you choose the one that will best help you reach your retirement goals. What works best for one person may not be the right choice for another, so take your time and figure out which one will be best for you.
The crucial thing to remember is that you want to set up a new account that will be eligible to accept a 401k rollover from your account. The good news is that you can rollover money from a traditional 401k account to almost any type of IRA, except a designated Roth IRA or a Simple IRA. As an additional benefit, you’ll be able to preserve the tax deferred status of your money through the rollover process (unless you’re moving your money into a Roth IRA).
Different financial providers have different regulations regarding initial deposits, as well as the amount of time that must elapse between opening of the account and its ability to receive a rollover contribution. For this reason, once you’ve decided on the type of account you want, it make sense to compare several different providers and their retirement investing options in order to choose one that best suits your needs.
Once you’ve selected your new IRA account type and decided on a provider, contact the account trustee or manager of the new IRA. This person has a couple of important jobs, the first of which is letting you know when your new fund will be ready to receive your rollover. The second important job is helping you initiate the rollover. Generally the account trustee or manager will have some documents that you’ll need to complete and sign. As soon as this paperwork is finished, your 401k IRA rollover can be completed.