@Blu617 wrote:Hello everyone,
I have recently left one of my full time jobs (I was working two) I have a 401k (two actually, one is traditional and the other is Roth) with the job that I left and I would like to roll it over into another investment account. I like the idea of having increased liquidity and I don't want to incur any penalties by withdrawing it. I was thinking of rolling it over into a Roth IRA so that I can be more selective of stocks and have the option to buy/sell as desired. Does this sound like a good choice or does anyone have any other suggestions? Thank you
You can freely roll your Roth 401(K) into a Roth IRA and your conventional 401(K) into a standard IRA. If you want to roll your conventional 401(K) money into a Roth IRA you will need to pay taxes and penalties to the IRS which, may or may not make sense (I'm betting not).
@coldfusion wrote:
@Citylights18 wrote:Yeah you have to move an employer 401k over into a Traditional 401k.
Not exactly. If you leave your employer you can move your 401K money into a rollover IRA, or in many cases you can choose to roll it over into your new employer's 401K plan. A Roth 401K (not that common, but they're legally allowable) can be rolled over into either a Roth 401K plan or a rollover Roth IRA.
When rolling over you need to take care to follow the correct process and not have any money dispersed to you directly else you'll be subject to the 20% witholding out of pocket and not recoup it until you file your next years tax return.
^THIS!
I just left a financial services company in May which managed retirement accounts for other companies and am pretty familiar with the various account types and what can be transferred to what. Even still, when I started at the new company I had to figure out what to do with my standard 401(K) and my Roth 401(K), and it was a righteous pain in the hind parts to get it all done.
I ended up rolling the Roth 401(K) into my existing Roth IRA, that was nice and easy, once I got both financial institutions on the same page with the paperwork. Rolling my 401(K) to my new employer's plan was a different story entirely. In the end, my money came out of the market, the first, second, and third checks sent to the new plan either never showed up, or were rejected (figure that one out, "Return to Sender" on a check for, well, lets just say, a LOT of money). The fourth check finally hit my new account two days shy of 5-WEEKS later! Yeesh! The market was pretty good in those five weeks, and I'm thinking the only entity which "made out" was State Street Bank who was the source of the checks and who held the money while it was in between plans.
