401k Rollover to IRA – What to know before making the transfer

Imagine that you had been working for a company for over 10 years. You had a good benefit program and each year your employer matched your contributions to your 401k plan. Now, for whatever reason, you have had to change jobs. Maybe there were layoffs, you moved to a different state, or maybe you just wanted a change of pace. You take a look at your old 401k and are thinking about what options that you have with it. Sure you could transfer it to a new 401k with your new employer, but perhaps there are more 401k rollover options that could be better for you. One of those options is to do a 401k rollover to IRA transfer. This article aims to provide some clarity as to the benefits of doing a 401k rollover to IRA transfer and what you can expect during the process.

The first major difference between rolling over your 401k into an IRA as opposed to rolling it into another 401k is that you will be transferring your account into a personal account.

An IRA is typically an account that is held by an individual alone, not by an employer. Now, we say typically because there are some cases where an employer will include an IRA as part of their benefit package. If that is the case, then the transfer process will be very similar to how we outline it in this article, except you will probably have a plan administrator to assist you. For the purposes of this article, we will assume that when doing a 401k rollover to IRA transfer that the account will be transferred to a personally held IRA.

Having a personal IRA means that you will have to find an IRA custodian or broker to actually hold your account.

There are many commercial entities out there that offer these services and they all have different benefits. When doing your research it is important to work with someone you can communicate well with and who listens to your goals. One of the cautions of working with a standard IRA broker is that you will most likely have to work with an advisor and will have to pay higher fees as a result. You were probably paying fees with your previous 401k too, so you might not see too much of a difference when transferring over to an IRA. Finding the right custodian or broker is important because this is going to be a company that you will probably work with for several years, you want to be able to trust them.

You can also do a 401k rollover to IRA transfer to a self directed IRA.

Self directed IRAs offer many more investment choices than a traditional IRA and can give you more control of your account. Another difference is that self directed IRA custodians do not employ advisors, so you will typically see fewer fees taken out of your account.
Whether you choose a traditional IRA or self directed IRA it is important to do plenty of research. USelfDirect belives in the power of knowledge and we think that you should too! That is why we have loaded our site with tools and resources to help you during your investment journey. We have also employed an excellent staff of IRA experts that can help answer your questions.

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