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How to Rollover a Retirement Account?

This is how you can rollover your retirement account

You might be switching jobs, or you may not like the retirement plans your current employer is offering you. In these situations, you will have to move your savings into a new 401(k) plan or an individual retirement account (IRA).

There are different options for your retirement account. You can cash out, consolidate your 401(k) into the retirement plan of your new employer, or rollover your assets into an IRA or a Roth IRA. In this article, we will discuss rolling over your assets and retirement account.

What Is a Retirement Account Rollover?

A rollover is when you take the funds out of your current 401(k) account or retirement account and move them into a tax-advantaged retirement account. This could mean rolling over into another 401(k) at another employer’s plan or an individual retirement account. In both situations, you should know and understand the best options available.

You can pursue two different rollovers, direct rollovers and indirect rollovers.

Direct Rollovers

Direct rollovers are the funds in your retirement account or 401(k) plan that you move and deposit directly from your current institution to your new retirement plan or IRA. These types of rollovers are one of the most productive ways to roll over funds from one place to another. You never get direct possession of the funds in your account, which means the funds won’t require taxing

Indirect Rollover

Indirect Rollovers or 60-day rollovers are when the funds or assets in your plan are placed in your possession before you can deposit them into your new IRA or retirement plan. Once given control of the funds, you have 60 days to deposit the said funds into your new plan. If you are older than 59 and fail to transfer the funds within 60 days, your funds will be taxed, and you will be penalized.

How can you roll over a Retirement Account?

The first step in rolling over your retirement account is talking to your new employer or institution. Not all 401(k)s accept rollovers from outside retirement plans. If you want to roll over into an IRA, you can find them through brokerages and other advisors. Once you know where to roll over your retirement account, you first have to open an account there.

The next step is to move your funds over to the new plan. Make sure you directly transfer your funds into the new plan to avoid any tax penalties on your money. Once you have moved your funds into the new 401(k) or IRA, you need to close your old retirement account with your former employer. If you don’t know how to close your old retirement account, try to talk to your old account manager and follow their guidance.


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