How to rollover your 401K account to traditional IRA

401K is the define contribution retirement account you'd set up with the company you work with, and your company automatically deduct some percentage of your paycheck to fund your 401K account. Most companies have matching contribution plan, meaning they match your contribution to your retirement account up to certain amount. It can be dollar per dollar, 50 cent on a dollar, 25 cent on a dollar, etc. You should set up 401K account if your company offer a matching contribution to your retirement account.

Difficulty: Easy

Instructions

1. You can open rollover IRA account with most banks, financial institutions or brokerage firms. Most people roll over their 401K to rollover IRA when they leave their job.

2. The advantages of rolling over your 401K plan to traditional IRA, your investment saving can continue growth tax deferred, you can have greater control over your retirement account and more investment choices.

3. You can invest in many investment vehicle with traditional IRA, mutual funds, bonds, single stocks, ETF, futures, options, etc. However most brokerage firm or other financial institution usually set limit what you can trade in your retirement account.

4. Some investments are very risky and you can lost more than what you invested. Such as some future trades or some advance option strategies.

5. There is 60 days time limit set by IRS to continue a tax-deferred rollover when you withdraw cash from your 401K and roll it over to traditional IRA account.

6. Open traditional IRA account at financial institution of your choice and then transfer the funds directly from your 401K account is the best way to rollover your 401K to traditional IRA, to avoid any taxes due or penalty and to avoid having cash in hand and use them for something else.