A 401(k) rollover is the direct transfer of the assets held in your 401(k) account to a new account or account provider.
You may wish to change the type of account in which your retirement assets are held (for example, by transferring your stocks and bonds to a traditional or Roth IRA or to a SEP IRA) or you may wish to change the company that manages your 401(k).
The Best Places to Rollover Your 401(k):
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In some cases, you may be required to rollover your 401(k). For example, if you change jobs, your former employer will most likely give you a limited window in which you can roll over your account. Even if you aren’t planning on rolling over your 401(k) anytime soon, research and understand where you’d like your money to go in case you need to choose a rollover option.
It can help save you from stress and a financial headache should you leave your job. We’ve compiled a list of some of the best places to roll over a 401(k) account, along with some additional information on when you should and should not roll over.
Why Would You Want to Roll Over a 401(k)?
Here’s why you may consider a switch.
Most 401(k) accounts include management fees, though some employers will cover this fee. Since most IRAs are self-directed, they do not charge annual fees related to management.
Some IRA providers, like Vanguard, offer both free account maintenance and fund expense ratios significantly less than most 401(k) management accounts. You can even open an account managed by a robo-advisor and pay less than 0.50% in management fees.
Loopholes to Early Withdrawals
If you withdraw funds from your 401(k) before retirement (unless in very specific circumstances), you’ll pay a whopping 10% in penalties. IRAs are much more flexible when it comes to early withdrawals.
For example, you can withdraw from your IRA to fund a first time home purchase or higher education expenses.
A Wider Range of Investment Control and Selection
When you contribute to your 401(k) account, your employer (or your employer’s team of investment advisors) most likely gets to decide where that money will go. With an IRA, you are in control — and there are unlimited possibilities with stocks, bonds, mutual funds, and ETFs.
Improved Estate Planning Options
After you die, your 401(k) account will be disbursed to your beneficiaries as a one lump-sum payment. IRAs provide increased flexibility when it comes to estate planning and payout schedules.
Benefits Without Penalties
You can enjoy all of these benefits with no initial start-up fee—it’s free to rollover your 401(k) into an IRA with most providers.
Why You May Not Want To Roll Over Your 401(k)
Rollovers aren’t for everyone. Consider the following:
You Need Money Access to Your Money Earlier
If you retire early, you can start making withdrawals from your 401(k) account penalty-free starting at age 55. Under most circumstances, you may not begin making withdrawals from an IRA until age 59 ½.
You Have a Large Number of Assets You Need to Protect
401(k) assets are protected in the event that you need to declare bankruptcy or you have creditors coming after you. IRA protection status varies by state, so you may not be covered.
If you live in California, Georgia, Maine, Mississippi, or West Virginia, your IRA has the potential to be seized if you are found to be at fault for a costly lawsuit. Even in states that protect IRAs, bankruptcy protection is typically limited to $1.28 million in assets.
You Want to Hold Onto Your Money a Little Longer Before Dipping In
401(k) accounts and IRAs both require that payouts start to be received no later than when the owner of the account turns 70 ½ years old. However, 401(k) accounts have a loophole that allows owners to defer these payments until after they actually retire; IRAs offer no such loophole.
The Best Places to Rollover a 401(k) Account
If you rollover your 401(k), make sure you do in the right place. Take a look at Benzinga’s top places to rollover your retirement account.
1. Facet Wealth
Facet Wealth, an industry disruptor, offers the type of expert, custom-fit financial advising normally reserved for those with a high portfolio balance. Its proprietary platform and streamlined client dashboard make it super easy to outline your financial goals and interact directly with your dedicated certified financial planner.
Fees range from $1,200 to $6,000 annually. You won’t pay for services you don’t use, so your actual fee will fall somewhere in that range based on complex your finances are and the level of financial guidance you require.
- New Bitcoin investors who have a handle on their overall financial strategy
- People who have room in their budget for a $100 monthly contribution for an easy set-and-forget savings and investment strategy
- Investors who can tolerate high levels of risk associated with trading crypto and who are able to hold precious metals investments for at least 10 years
2. Bitcoin IRA
Bitcoin IRA is the first full-service solution that allows you to invest in Bitcoin, Ethereum, Ripple, Litecoin, Bitcoin Cash and Ethereum Classic using your IRA. Bitcoin IRA makes the complex process simpler and safer. It’s fully transparent and straightforward to help you achieve your retirement goals with cryptocurrencies.
Whether you need help with a rollover, Traditional, or Roth IRA—it only takes a few minutes to open an account and get started.
- Novice investors
- Retirement savers
- Day traders
3. TD Ameritrade
TD Ameritrade offers something for everyone, no matter the savings goal or how far away you are from retirement.
For hands-off investors searching for mutual funds and ETFs, TD Ameritrade offers an extensive collection of over 4,000 commission-free mutual funds and 300 commission-free ETFs.
For the more advanced trader, TD Ameritrade shines with its research and analysis tools, largely considered to be the most comprehensive on the market. TD Ameritrade offers three separate trading platforms, a full-service app, and a full range of tradable securities which includes forex and futures trading.
Commissions are reasonable at $6.95 per trade and TD Ameritrade also has a $0 account minimum for IRAs, meaning that anyone can roll over an account today.
With no expensive inactivity fees and a wide selection of both short and long-term securities, TD Ameritrade is equally as useful to the active day trader as it is to the passive investor saving for retirement.
- Investors with defined financial goals
- People who are new to investing
- Passive investors who want to diversify their portfolio
- Investors who want to invest heavily in ETFs
- Investors looking for low-cost investment options
- Investors looking to plan their retirement
Another robo-advisor for those seeking low-cost, hands-off management, Betterment currently holds about $11 billion in assets under management.
Betterment has no account minimum and charges an annual fee of just 0.25% for management for accounts with under $100,000 in assets. If you enjoy goal-based saving, you’ll love Betterment’s sign-up process, which guides you towards a series of short- and long-term financial goals based on age, risk tolerance, and income.
Betterment also allows you to quickly add your own personal goals and adjust asset allocation ratios manually.
Betterment is best for low account balances and passive investing. Betterment’s robo-advising services make rolling over and expanding an existing retirement account simple.
- Long-term investors
- Anyone who wants to manage their financial control panel from a smartphone
- Investors with enough capital to get the full benefit of Wealthfront technology
Wealthfront is a robo-advisor with over $10 billion in assets currently under management. When you roll over an account to Wealthfront, the service will ask you a number of questions about your financial situation, employment status, age and outstanding debts to gain a better picture of your investing needs.
Wealthfront’s robo-advisors completely automate the investing process, dividing contributions into a unique mix of asset classes that suits your situation.
From there, Wealthfront offers free threshold-based rebalancing and tax-loss harvesting—and you don’t lift a finger. An excellent choice if you’re looking for hands-off investments, Wealthfront provides an affordable and streamlined solution for retirement savings.
- Retirement savers
- Buy-and-hold investors
- Investors looking for a simple stock trading platform
One of the world’s leaders in low-cost investing, Vanguard offers over 70 commission-free ETFs and over 2,800 commission-free mutual funds if you purchase your funds directly through Vanguard’s site.
Rolling over an account with Vanguard is easy, and your assets can quickly be transferred to a Roth IRA, a Traditional IRA or a SEP IRA if you are moving into independent contracting or you’re looking to start your own small business.
Vanguard’s platform makes investing easy and most of its mutual funds have rock-bottom expense ratios. For example, its most popular offering (the Vanguard S&P 500 Admiral Class) has an expense ratio of just 0.04%, over 80% lower than most competing index funds on the market.
Find the Right Rollover Vehicle
Though you can open and maintain an IRA with little hassle, there are limitations on this type of account that may not make it the right choice for everyone.
If you plan to contribute more to your retirement account and you are considering rolling over to start your own small business or become an independent contractor, the higher contribution limits in a SEP IRA may make this type of account better suited for your needs.
Frequently Asked Questions
When can I rollover my 401(k)?
Anytime after you leave your old job.
How long do I have to rollover my 401(k) into an IRA?
You have 60 days to put the money into an IRA without any tax consequences. The amount that does not go into the IRA is taxed as ordinary income.