It is possible for a person to transfer their 401k account to an IRA. In order to do this, you must be at least 59 1/2 years old (retirement age), or if you are leaving a job that you currently have. You will then have to fill out a 401k election form that allows you to inform your current employer about the amount of money being transferred out of the 401k and into the IRA.
After, look for a good financial institution to rollover your 401k into. Another form will be given to you which gives the bank permission for a direct rollover once you open your account. Due to the U.S Patriot Act, your name, address and other information may be asked in order to identify and verify who you are. Before opening an account, review the bank`s rules or limitations on transfers from your 401k to IRA.
One of these limits can be caps on contribution amounts for the year. Move all your funds out of your 401k as soon as possible, as the Internal Revenue Service requires you to deposit withdrawn funds within two months. If you do not, a 10-percent tax may be charged upon the money.
There are many advantages to an IRA over a 401k, as retirement money is sometimes left with a company that you previously worked for. An IRA allows much more choices in tax options and estate planning, making things simpler. In addition, a Roth IRA allows you to pass on your money to a beneficiary, while the account is still tax-deferred.
When rolling over your 401k to an IRA, you will be charged taxes on the amount being deposited into the account. If you have the opportunity to roll over your 401k retirement plan to an IRA, you should take advantage of it as there are many benefits to an IRA over a 401k.
The process of depositing money from a 401k into an IRA is fairly easy once you have all the proper paperwork filled out. You should look into different options and banks and find the one that has the best offerings for you.