Open a Traditional IRA account at a broker of your choice.
Once you have your account details, request a 401K Rollover form from your old 401K custodian. By law they have to provide this and the company HR has no say in this (in case you had a bad exit!). There is no expiry date on when you can do a rollover. You can request a rollover whenever you choose once you quit your job
This is a very simple form where you specify what you wish to do with your 401K funds. Choose a Traditional IRA rollover and provide the account info from STEP 2.
One crucial information that you’ll be required to fill out is to the question, whom should the check be made out to. Do not fill in your name! The check should be made out to your new IRA custodian.
So if you were called Guybrush Threepwood and your IRA custodian was Wells Fargo Advisors, you would write:
To: Wells Fargo Advisors (FBF Guybrush Threepwood)
This is called a trustee-to-trustee transfer.
That’s pretty much it! Once the rollover is complete, you should see the funds deposited in your IRA. You are now free to invest!
If I do a 401K rollover to an IRA, would that count towards the IRA contribution limit for the current year?
Will there be a fee to do a rollover?
Your old custodian will ding you with a fee. Usually ranges from $40 to $100 which will be taken out of your 401K funds. The new custodian won’t charge you for incoming funds, but might have annual maintenance fees. Check with your custodian.
Can I rollover all my old 401Ks into a single eligible account?
The company I worked for went belly up. Can I do a rollover?
Yes. Contact your old 401K custodian. Your 401K funds are protected by Employee Retirement Income Security Act (ERISA). Note that, ERISA only protects your funds in case of company bankruptcies, not the value of your funds! If you had all your money invested in Enron, you have no one to blame, but yourself!
Can I do a rollover from my current job’s 401K account?
Usually no. There are special circumstances like a merger, but normally, you can’t. You can do a rollover once your leave your job.
Is there a limit to the number of rollovers I can do?
No, but you can only do 1 rollover within a 12 month period if you do an indirect rollover. Although, no such limitation exists for trustee-to-trustee transfers.
When you leave behind your old job for a better opportunity, in your excitement, don’t forget your 401K! Consolidation will make your life a lot easier. Also, know the difference between a direct and indirect rollover. Always opt for the former. Your old 401K provider may or may not explain the difference, but be aware there are consequences (60 day window and 20% tax withholding) with an indirect rollover.