savings

Roll Over Your 401(k)

When you leave your job or retire, you can roll over your 401(k) account to an IRA or to the 401(k) at your new job if it accepts a rollover.

When you leave your job or retire, you can roll over your 401(k) account to an IRA or to the 401(k) at your new job if it accepts a rollover. The process is similar to transferring an IRA.

1. Fill out the required forms from your employer and include account information for the place to which you are transferring your funds. Your benefits department should be able to help you.

2. Authorize an electronic funds transfer. If you must take a check, make sure the check is made out to your new custodian and not to you. Otherwise, your employer will be required to withhold 20% of the balance for taxes, and you must roll over the entire amount of your distribution (including the 20% you didn't receive) within 60 days.

NOTE: Are you younger than 55? Don't cash out your account. If you do, you'll owe state and federal income taxes on the entire distribution, plus a 10% early-withdrawal penalty. And that's no way to save for retirement.

START NEXT SECTION: When to Dump Stock

JUMP TO:

 

Finance

 

Credit

 

Retirement

 

Investing

FINANCIAL TOOLKIT MAIN PAGE

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 25 Cheapest U.S. Cities to Live In
places to live

The 25 Cheapest U.S. Cities to Live In

Take a look at our list of American cities with the lowest costs of living. Is one of the cheapest cities in the U.S. right for you?
October 13, 2021
4 Big Retirement Blunders (and How to Avoid Them)
retirement

4 Big Retirement Blunders (and How to Avoid Them)

It’s too bad, but financial advisers see these four mistakes all the time. Don’t fall into the same traps.
October 6, 2021

Recommended

The Best Fidelity Funds for 401(k) Retirement Savers
Investing for Income

The Best Fidelity Funds for 401(k) Retirement Savers

Fidelity funds are renowned for their managers' stock-picking prowess. We rate Fidelity's best actively managed funds that are popular in 401(k) plans…
October 25, 2021
4 Ways to Earn More From Your Rainy Day Fund
savings

4 Ways to Earn More From Your Rainy Day Fund

You should set aside enough money to cover three to six months of living expenses in case of an emergency. But sticking this cash in a savings account…
October 12, 2021
Should Your 401(k) Be ‘Custom Made’?
401(k)s

Should Your 401(k) Be ‘Custom Made’?

Many retirement plans offer participants the opportunity to get tailor-made investment advice for an additional fee. And like many bespoke products, t…
October 11, 2021
The Best Vanguard Funds for 401(k) Retirement Savers
mutual funds

The Best Vanguard Funds for 401(k) Retirement Savers

Vanguard funds account for roughly a third of the 100 most popular 401(k) retirement products. We rank Vanguard's best actively managed funds, includi…
October 8, 2021