How to Roll Over Funds into an IRA

Simplify your financial planning and take charge of your future by rolling over funds from old retirement plans -- like a 401(k) from a former job -- into a single Individual Retirement Account, or IRA. Here's how.

Instructions

  • Step 1: Understand IRAs Understand what an IRA is: An IRA is a special type of savings account that offers tax advantages for saving for retirement. The funds in your IRA can be invested in lots of ways -- stocks, bonds, mutual fund, annuities, and other assets. And the best part is that the assets in an IRA grow tax-deferred until you withdraw the money in retirement.
  • Step 2: Know what a rollover is Know what an IRA rollover is: the transfer of assets from an old or existing retirement savings plan -- such as a 401(k) -- to an Individual Retirement Account.
  • Step 3: Understand the benefits Understand the benefits of IRA rollovers. When you roll over assets that are sitting in old or inactive retirement accounts and consolidate them into a single IRA, you can get a complete picture of your retirement savings. This makes it easier to ensure that your investments are properly positioned and match your tolerance for risk and your time horizon for retirement.
  • Step 4: Appreciate the simplicity Appreciate the simplicity. Consolidating and creating a single IRA also simplifies recordkeeping -- making it easier to monitor your investments every step of the way and check that they’re keeping pace with your long-term financial goals.
  • Step 5: Take the plunge Ready to roll over? Open an IRA with a financial services provider and then contact the benefits department of the firm holding your old account and ask them for the form you’ll need. Or, you can make a direct transfer of your assets, also called a "trustee-to-trustee transfer," to avoid having taxes withheld from the rollover. This will ensure that all funds go to work for you immediately in your new IRA.
  • TIP: When opening an IRA, look for an investment company that doesn't charge annual or IRA maintenance fees.
  • Step 6: Consult an expert Consult an expert. You can select the investments to include in your new IRA, but you may want to have a financial advisor take a look at your entire financial picture to make sure your portfolio is balanced. A financial advisor will also help you understand the rules around rollovers. That kind of expertise can help you save big -- potentially leaving you even more money in the long run to do the things you love to do!
  • FACT: Over the same period of time, an IRA can earn more than a regular taxable savings account. Contributions and earnings aren't taxed until you withdraw them, so you have more money compounding.

You Will Need

  • IRA
  • Retirement accounts

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