How to Put a 401k Into an IRA
When you leave an employer, make sure to take the funds in your 401k with you. Once you leave a company, you are no longer able to make contributions into its 401k program. Moving your 401k balance into an IRA account is a way to better manage your retirement savings. An IRA account allows for tax deductible contributions and tax deferred growth like the 401k. You are able to choose whichever investment company you want for your IRA and are not limited to the company of your 401k. You can't move a 401k, however, unless you have left the company where you had the account.
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Instructions
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Contact your former company's benefits department and let them know you would like to roll over your 401k balance. Ask the company's policy on rollovers. Some companies will directly rollover your account into an IRA account. Others will forward the money to your bank account and you will need to re-invest the funds yourself.
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Contact the investment company that you want to use for your IRA. Let them know that you will be making a 401k rollover into an IRA. They will put you in touch with a registered representative to handle the transaction.
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Fill out the investment company's forms for an IRA rollover. Make sure to let the company know if you are moving the funds directly from your old 401k or from your bank account.
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Tips & Warnings
If your 401k balance must be sent to your bank account for an IRA rollover, make sure to move the funds into an IRA as soon as possible. You have 60 days to transfer the funds to a new retirement account. Otherwise you will be charged income tax and a 10 percent early withdrawal penalty on the entire balance.
References
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