How to Understand 401k to Ira Rollovers
- 1). Choose a financial institution. Choosing a financial institution for 401k to ira rollovers is important. The interest rate you'll earn on an IRA varies; the higher the rate, the better the earnings. Check out websites like www.bankrate.com, which provide quick comparison tools to find rates.
- 2). Decide on the type of IRA. Companies that offer "service 401k rollover" usually offer two options: Traditional IRAs and Roth IRAs. With a traditional IRA, the plan holder doesn't have to pay taxes; it can be transferred directly into an IRA account. With a Roth IRA, however, the account holder must foot the taxes, and can get the money back on their next tax bill.
- 3). Sign the authorization forms. Once you've chosen a financial institution, they will provide an authorization to rollover funds. Complete and sign the form and return it to the institution that will be taking over the account.
- 4). Double check the transaction. When using 401k to ira rollovers, keep an eye on your account for 60 days after the transaction. If the funds don't show up in the new account, contact the 401k provider immediately. Although it doesn't happen often, an incorrect account number or typo could send the funds to the wrong place.