Rolling Over Pension Into an IRA Step-by-Step

Rolling your pension over into an IRA is something that you may have to deal with if you lose your job or change jobs. If you fail to move your pension into an IRA or similar account within 60 days of leaving your job, you will have to pay taxes on the money and pay an early distribution penalty. If you rollover your pension into an IRA correctly, you can avoid this tax penalty and save your retirement for yourself. Here is how you can roll your pension into an IRA properly. 

Shop for an IRA

The first thing that you have to do is shop for the right IRA for you. There are many different IRA providers out there and they all offer something a little bit different. One thing that you need to verify is the amount of fees that come with the IRA. Most of them will offer similar investment options, however the fees can vary greatly. You might be charged transaction fees, maintenance fees, and a number of other things along the way. Try and find one with a fee structure that you can live with and get the information that you need. 

Paperwork

In order to get the rollover process started, you will need to fill out the appropriate paperwork. This involves you filling out a few forms with your new IRA provider. You will need to let them know that you are rolling over an account from a pension fund and they will have a particular form for you to fill out. They will also request that you verify that you are the owner of the account that is being rolled over. You can do this by providing them with a recent statement from your pension fund. 

Rollover

Once you fill out the appropriate paperwork and prove that the account is indeed yours, the rollover process can begin. Your new IRA provider will contact the pension fund administrator on your behalf and request that the money be transferred. They will take care of everything for you on this end once your paperwork is done. This process will usually take a few weeks to be completed and then you can start enjoying your new IRA account. 

Investment

Once your money is moved into the IRA from the old pension fund, you can start to move it around to where you want. You can distribute the funds as you see fit to a number of different investments. Just choose the investments that you want and the money will be transitioned from your IRA into them. This level of flexibility is probably something that you are not used to with a pension. Therefore, you might want to ask for assistance from your new IRA provider before you get too far involved. They can make sure that you are assigning all of your funds correctly and also give you advice as to how you should allocate the funds. 

 

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