Knowing Your 401k Rollover Options

There are 401k rollover options to change your retirement account structure, but they will not come without penalties and some degree of hassle. If you feel you have large benefits to gain from rolling over into an IRA, Roth IRA or other structure, consider the following:

Direct Transfer

First, there is an option to directly rollover your funds by setting up your receiving account first. Then, you simply have your plan administrator move the funds from one account to the other. If your new account requires you pay taxes before funds are deposited, like a Roth IRA, then you will have to pay those taxes on the funds transferred.

Payment then Transfer

You may elect to have a payment made to you and then deposit the amount on your own. If you choose this option, it is not without its drawbacks. Failing to deposit the funds fast enough into your new account can result in large withdrawal fees.


If you are under the age of 59 1/2, then you may find you face penalties on your rollover. This is viewed like an early withdraw, and you may be assessed 10% of the funds for taking them out too early. Ask your accountant about your options and what you will be penalized before making the choice.


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