How to Keep My 401(k) or Roll Over Into an IRA
When you leave a job where you have a 401(k) account, you may not be able to leave the money in that account. Typically after you leave, you will get a letter in the mail from the financial institution that manages the 401(k) letting you know your options. If you do not want to take a distribution from the 401(k) account, you can just roll it over into a traditional or Roth IRA account. Since 401(k) money is pre-tax, it is usually best from a tax standpoint to roll it over into a traditional IRA account.
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Instructions
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Look at your most recent 401(k) account statement to check the balance. If the balance is $5,000 or higher, you can keep your 401(k) account in the current plan. If the balance falls below $5,000, or if you are over retirement age, the company can request that you take a payout or rollover the balance.
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Select a brokerage to open your rollover IRA account (see Resources). When evaluating the different brokerages, you may want to review the minimum opening balance requirement and the annual fees, so that you can pick the best brokerage for you.
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Open a rollover IRA account with a brokerage. It can be an online brokerage, or a local brokerage in your community. If you do it online, you can simply click on the "Open New Account" link on the brokerage website. You will need to enter in your name, date of birth, social security number, address and banking details. Once you finish the account opening, you will be given an account number for your new rollover IRA account.
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Contact the financial institution that has your 401(k) account and let them know that you want to do a rollover into an IRA. Give the name of the brokerages and the account number for the IRA. In some cases, the money may simply be transferred into the rollover IRA. If not, a check will be issued and sent to you and you need to then send it to the brokerage for deposit into the rollover IRA.
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References
Resources
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