When planning for your retirement, you have probably heard the term “rollover” in relation to a 401(k). But how do you rollover a 401(k), and what are the specific steps? All of your questions should be answered in the below post.
What is a 401(k) Rollover?
A 401(k) rollover is the process of moving money from one 401(k) plan to another, either all at once or in parts. When someone changes jobs, they often do so because they can move their retirement money from their old employer’s plan to the new plan they’re enrolled in. On the other hand, a 401(k) withdrawal means taking money out of the plan. This is not the same as rolling over a 401(k).
Why would you want to change your 401(k)?
You might need to do a 401(k) rollover for a number of different reasons. Most people will do what is written here when they change jobs and want to move their retirement funds to a plan offered by their new employer. You can roll over your 401(k) if you find a plan with better options for investments and lower fees than the one you’re using now. If you want to combine multiple retirement accounts into one, rolling over your 401(k) may be the best way to do it.
How to rollover a 401(k) in 4 steps
How to roll over a 401(k) depends on the company that runs the retirement savings plan. Most of the time, though, this is how the procedure is done:
- Contact the company in charge of your plan and let them know you want to start a rollover.
- Talk to your current plan provider about the new plan. Tell them the name of the new plan, its address, and how to reach the new plan administrator.
- After that, the money from the old plan will be moved to the new plan by your plan provider.
- Once the money has been transferred, the new insurance company should send you a statement to confirm the rollover.
Keep in mind that you must finish the rollover within sixty days of getting the money from the old plan. If you don’t, you’ll have to pay a tax penalty.
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