I quit my job in December 2021. I completed the 401K rollover to my Traditional IRA and Roth IRA. In this video, I will go over the 3 simple steps to move your money from 401k to IRA.

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⏰ Table of Contents ⏰
0:00 How much I had in my 401K
3:50 3 Steps to Roll Over 401K
7:24 Pros and Cons of 401K Rollover

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401K to IRA Rollover in 3 Simple Steps

A 401K to IRA rollover is a process that allows you to transfer your retirement savings from your employer-sponsored 401k plan to an individual retirement account (IRA). This can be a smart move if you want more control over your investments and lower fees. Here are three simple steps to guide you through the rollover process.

Step 1: Choose the right IRA
The first step in the rollover process is to select the appropriate IRA to transfer your funds into. There are two main types of IRAs to choose from: a traditional IRA and a Roth IRA. The main difference between the two is how they are taxed.

With a traditional IRA, contributions are usually tax-deductible, and you will pay taxes on the money when you withdraw it during retirement. On the other hand, with a Roth IRA, contributions are made after-tax, meaning you don’t get a tax break now, but you won’t pay taxes on the money when you withdraw it in retirement.

Consider your current and future financial goals and consult with a financial advisor if needed to decide which IRA best suits your needs.

Step 2: Contact your 401k plan provider
Once you have decided on the type of IRA you want to open, the next step is to get in touch with your 401k plan provider. They will provide you with the necessary paperwork to initiate the rollover process. This paperwork typically includes a distribution request form, which you need to fill out and submit.

Be sure to inquire about any fees or taxes associated with the rollover. Some 401K plans charge an early withdrawal fee if you are below a certain age, and there may also be tax implications if you are rolling over from a traditional 401K to a Roth IRA.

Step 3: Open your IRA and transfer funds
Once you have completed the necessary paperwork with your 401k plan provider, the final step is to open your IRA account. You can choose to open an IRA with a traditional bank, brokerage firm, or any financial institution that offers IRA services.

When opening the account, you will need to provide your personal information and the necessary documentation from your 401k plan provider. This documentation usually includes proof of your 401k account balance and a statement of the funds you want to transfer.

Once your IRA account is open, your 401k plan provider will transfer the funds directly into your new IRA account. It is crucial to ensure that the transfer is classified as a “direct rollover” to avoid any taxable events.

In conclusion, the 401K to IRA rollover process can be completed in just three simple steps. By choosing the right IRA, contacting your 401k plan provider, and opening your new IRA account, you can gain more control over your retirement savings and potentially enjoy lower fees. Remember to consider your financial goals, consult with a professional if needed, and ensure the proper documentation is provided for a smooth and successful rollover.