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 previous 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:
Generally, individuals keep the same deferred tax status account type. Here is a chart to help decide. You can sort out your 401(k) tax account type by reviewing your statement or calling your plan provider.
If you decide to rollover your 401(k) into a Roth IRA, there will most likely be a tax balance involved. We’ll walk you through the process, no worries.
- Open a retirement account depending upon your 401(k) account type.
- Examples: 401(k) -> Traditional IRA; Roth 401(k)-> Roth IRA
- Contact your 401(k) plan provider:
- Ask your plan for a “direct rollover.” They’ll know what to do.
- Your 401(k) plan provider will ask you to fill out forms in order to obtain your consent in distributing your assets. They’ll move your money right over to a Swell account, hassle free.
- Paperwork, paperwork, paperwork:
Once you’ve obtained the necessary forms, please include the instructions below on how your provider should write out the check.
It is crucial that the check be made payable as shown below and NOT to you.
There are other documents you may need, your current plan will keep you updated.
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:
8180 Greensboro Drive, 8th Floor
McLean, VA 22102
It is possible that your provider may want to send the check directly to your home, instead of Folio. Once you receive the check, confirm the check is made payable to Folio Investments Inc. and mail it to Folio.