How to Transfer an IRA to a 401k

Your retirement funds will undergo a variety of changes as your career progresses. Individual retirement accounts (IRA) offer a flexible spending option as you head toward the end of your career, while a 401k offers higher growth through responsible saving. You should transfer money from an IRA to a 401k if you feel your new employer's 401k options are beneficial.

Things You'll Need

• Account information for 401k and IRA
• Statements from former 401k accounts
• Direct deposit form

Instructions

1. Review your 401k prospectus to determine your ability to deposit outside funds into your new account. Some employee-sponsored 401k funds only allow deposits from your paycheck, to ensure a simple contribution process. There are likely to be long transfer processes for 401k accounts that allow outside deposits.

2. Calculate your IRA rollover as part of your annual contribution limit to your 401k. The federal government allows you to deduct your IRA earnings, up to a certain amount, from your taxable income. This incentive is only allowed if you fall within the current contribution limit for both your retirement funds.

3. Separate old 401k rollovers from other IRA funds if you anticipate transferring these funds into a future 401k. You can only transfer IRA money to a 401k if it is the exact amount of withdrawals made from a former employee-sponsored fund.

4. Collect a direct deposit form from your IRA manager to aid the transfer process. Your IRA trustee will provide a simple form where you write account information, transfer amount and 401k information. This data is used to transfer money directly from your IRA to a new 401k to expedite the process.

5. Wait for your first paycheck to arrive to ensure your 401k account is fully established. Your 401k should have a deposit from your first pay period if the paperwork has been properly filed.

6. Reimburse your checking or savings account with IRA funds while you defer the maximum amount to your 401k. You can calculate the difference between your ideal amount of contribution and the maximum to determine how much you need to reimburse your everyday accounts.

Tips & Warnings

• Check every account number, signature and financial detail as you transfer money from an IRA to a 401k. Most transfer issues develop out of a misplaced number, a missing signature or an issue with your IRA account total. Use your accountant or an attentive friend to double check forms before submission.