401K transfer? How does this work?

[DJ_Critterus]

I have an opportunity to sign on with another company in the near future. I'll spare the details because I don't have the job yet, but I'm very hopeful.

What I waanted to know was how 401K works when you switch compaanies? i've put a load of $$$ into the plan I have with this current company and wonder if that 401K account stays open somehwere out there and the new company simply sends the funds to it?

Do i have the idea correct or do I need to take that money I've already got in the account and transfer it myself? Does that account simply stay floating out there until it's time to retire or what?

[Stangkiller]

Originally Posted by DJ_Critterus

I have an opportunity to sign on with another company in the near future. I'll spare the details because I don't have the job yet, but I'm very hopeful.

What I waanted to know was how 401K works when you switch compaanies? i've put a load of $$$ into the plan I have with this current company and wonder if that 401K account stays open somehwere out there and the new company simply sends the funds to it?

Do i have the idea correct or do I need to take that money I've already got in the account and transfer it myself? Does that account simply stay floating out there until it's time to retire or what?

Typically you'll start a new 401k account with the new company, and "roll-in" your funds from your old account, I believe you can leave your old account open with the existing funds in it for quite a while. In my case after about 8 months my old company started contacting me to get my money rolled into my new 401k.

When I did my roll over, I submitted a form to my old 401k company and they sent a check to my new 401k. All in all it was pretty simple & straight forward, I incurred no fees from the old or new account.

[Scruff Vette]

Make sure if and when you do a roll over that $1.03 or some amount equally stupid doesn't get left in your old account due to timing. It's a bitch to get annual tax forms, mailings etc. on said amonunt and more paperwork and aggrevation to resolve. I know first hand.

[BRU]

You might take a look at the investment options in your new 401k before rolling the monies over. If they are very limited or expensive, it might make more sense to roll the monies into an IRA instead. You can always roll the IRA into the 401k later, but generally you cannot roll out of a 401k (even rollover monies) until you're separated from service.

[DJ_Critterus]

Originally Posted by BRU

You might take a look at the investment options in your new 401k before rolling the monies over. If they are very limited or expensive, it might make more sense to roll the monies into an IRA instead. You can always roll the IRA into the 401k later, but generally you cannot roll out of a 401k (even rollover monies) until you're separated from service.

When you say "Separated from service" are you talking about military service or service to the previous compaany?

I also think I need to get with my credit union and start looking at IRAs especially if they aare safer than a 401K for the amount of money I have in them. It's nothing too substantial at this point, but I certainly don't want to squander my hard earned cash on nothing (bam bam and crew will probably beat me to that anyway).

[MEC5LADY]

Originally Posted by Stangkiller

Typically you'll start a new 401k account with the new company, and "roll-in" your funds from your old account, I believe you can leave your old account open with the existing funds in it for quite a while. In my case after about 8 months my old company started contacting me to get my money rolled into my new 401k.

When I did my roll over, I submitted a form to my old 401k company and they sent a check to my new 401k. All in all it was pretty simple & straight forward, I incurred no fees from the old or new account.

[VITE1]

Open an IRA. Then roll the money into that. Sooner or later you will leave your new company. When you open the IRA tell them what you want to do and in many cases, After signing reams of paper, they will take care of it for you.

I just went through it , yet again.

And REALLY learn about investing. Its a part time job that can pay off BIG.

[DJ_Critterus]

Originally Posted by VITE1

Open an IRA. Then roll the money into that. Sooner or later you will leave your new company. When you open the IRA tell them what you want to do and in many cases, After signing reams of paper, they will take care of it for you.

I just went through it , yet again.

And REALLY learn about investing. Its a part time job that can pay off BIG.

So, you opened the IRA, then told told your bank/credit union what you wanted to do, and they took your $$$ from the old 401K account and made it magically appear in your new IRA?

One thing I need to read up on is the benefit of IRA vs. 401K. In the long one which is better or what factors can make one option better than the other?

[GTRain]

Proceed with caution.

There are IRA's, and there are Rollover IRA's. If you mix them, you co-mingle money and that can have tax consequences. You have to keep ERISA 401K money separate from after tax IRA money.

Generally, you roll from one 401K to another. This avoids questions or audit red flags from the IRS.

[DAB]

good advice so far.

generally speaking, i prefer to roll old 401k accts into an IRA, as i have way more investment options available.

you would be well served to find an investment advisor and get some professional advice. depending on how large your accounts are, some waive fees. shop around the large boys (wells fargo is who i deal with), and ask around friends, see if they can suggest anyone good.

[DJ_Critterus]

Originally Posted by DAB

good advice so far.

generally speaking, i prefer to roll old 401k accts into an IRA, as i have way more investment options available.

you would be well served to find an investment advisor and get some professional advice. depending on how large your accounts are, some waive fees. shop around the large boys (wells fargo is who i deal with), and ask around friends, see if they can suggest anyone good.

I'll start with USAA and see what they have to offer and go from there.

GTrain, I'm guessing a good financial advisor (not something like merril lynch) would be able to keep me from falling into the .gov sanctioned theft of my money?

[Wathen1955]

When I did mine 5 years ago, I rolled it into an IRA that I already had, but I never received the check. I had it sent directly (electronic) to the IRA account. I did not want the IRS saying I received this money and now I have to pay taxes.

[GTRain]

Originally Posted by DJ_Critterus

GTrain, I'm guessing a good financial advisor (not something like merril lynch) would be able to keep me from falling into the .gov sanctioned theft of my money?

Sure, actually any of the 401K advisors can help you for free at their call centers.

It all depends on what you want to do in the future. Any of the guys that rolled it into a regular IRA, the money is co-mingled, so it can't come out and go back to a 401K. The difference is the registration, if you register it as a ROLLOVER 401K and keep the money separate, then it can move back to a 401K in the future. Again, its all in the name registration on the account. If you prefer to have it in an IRA, just insure all that $$ is separate and you can invest it any way you please within the rules of the IRA. You will lose the ability take loans and it removes some rules on hardships should you ever need them...