The key advantage in using a rollover company when you want to take the funds from your 401k and make a rollover to an IRA is avoiding issues that could lead to tax and other penalties. When you roll over your retirement account, you have to ensure the process is done according to IRS regulations. Otherwise, you could be subject to the 10 percent early distribution penalty and other taxes.
Avoiding the Penalty
To avoid a 10 percent penalty, your rollover must occur within a narrow window of time. This is to prevent an investor from taking the cash out of a retirement account, spending or investing it, and then returning it to a retirement account in the future. When you work with a company, your investment goes straight from one account to the other, so it is impossible to face the penalty.
Planning for Taxes
If you are changing between traditional and Roth options, you will owe taxes. A Roth IRA taxes the money up front, and then the money is not taxed again on the back end. Since a traditional 401k does the opposite, the money has not yet been taxed. Therefore, a portion of the funds must be allocated toward taxes, but taking those taxes out of the account itself will result in a penalty. A rollover company can tell you how much cash you must have on hand for the payment.