Can I rollover my 401(k) from my previous employer into an IRA?

People often roll their previous 401(k) over into an IRA since it allows for more investment options and control. Some IRAs will give you the option to select socially responsible stocks and often have better fee structures than a 401(k). Plus, it’s easier to consolidate your retirement funds and deposit your current contribution into a retirement account, which can’t be done in a previous 401(k).

There are two ways you can rollover your 401(k) into your IRA.

1) An Indirect rollover is when you take the cash from your 401(k) and deposit into your bank account, and then transfer it to your retirement account. You have 60 days to do this once your plan provider has issued you the check.

2) A Direct rollover is when the cash from your previous 401(k) is deposited directly into your retirement account. Here’s how that works:

1. Determine the type of 401(k) you held with your previous employer.

Generally, individuals keep the same tax treatment (Traditional vs. Roth) when rolling over a defined contribution plan. Here is a chart to help determine where your 401K can go. Don't know the tax treatment of your plan? Call your plan provider or take a look at your statement. (Please note that if you decide to rollover your 401(k) into a Roth IRA, there will most likely be tax implications. Please be sure to consult with a tax advisor beforehand.)

2. Open a Swell Investing Account

Once again, please note that unless you have extenuating circumstances, people typically go from Roth to Roth and Traditional to Traditional. Please be sure to consult with a tax advisor before rolling over your 401K into a different account type.

3. Paperwork, paperwork, paperwork:

Once you’ve obtained and completed the necessary forms from your plan provider, please include the check instructions below when turning them in. They will liquidate the assets and send a check per the instructions.

Please note that it is crucial that the check be made payable as shown below and NOT to you directly.

Check Instructions:

Payable: Folio Investments Inc.
Memo section: Your name; your Folio account number (found by clicking on ‘Settings & Info’ followed by ‘Brokerage Account Info’): “Rollover”

Instruct your plan provider to mail the check to:

Folio Investing
8180 Greensboro Drive, 8th Floor
McLean, VA 22102

4. Once your funds arrive, we will email you with instructions on how to invest them into your Swell portfolio mix. It usually takes 3-4 weeks for the check to be made and sent from your provider to Swell.

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