Where to Rollover Your IRA: A Comprehensive Guide

Learn where to rollover your 401K into an accumulated IRA so that it maintains its tax-deferred status without paying current taxes or early retirement penalties at the time of transfer.

Where to Rollover Your IRA: A Comprehensive Guide

A Rollover IRA is an account that allows you to transfer funds from your previous employer-sponsored retirement plan to an IRA. This type of account allows you to maintain the tax-deferred status of your retirement assets, without paying current taxes or early retirement penalties at the time of transfer. With a Rollover IRA, you can access a wide range of investment options that can meet your objectives and risk tolerance, including stocks, bonds, certificates of deposit (CDs), ETFs, and mutual funds. If you're looking for a broker to help you manage your Rollover IRA, TD Ameritrade and Charles Schwab are two great options.

TD Ameritrade is a great choice for active traders looking for professional-level tools to help them invest better. The broker's prestigious thinkorswim trading platform allows you to place trades on stocks, bonds, ETFs, currencies, and futures. It also works perfectly if you're a long-term buy-and-hold investor. You'll find all kinds of reports on stocks and markets, and you can review a large selection of mutual funds with no transaction fees.

TD Ameritrade also offers commission-free stock and ETF trading. Charles Schwab is another great option for managing your Rollover IRA. The broker has acquired TD Ameritrade and will eventually integrate the two companies. Charles Schwab's robo-advisor can create a portfolio based on how much risk you're comfortable with and when exactly you need the money.

You'll receive an automatic rebalance to keep you on track to your goal, and you'll also pay reasonable commissions for the funds you invest in. Wealthfront also has some core tools in place, including an automated financial planner that can help you keep track of all your investments, even in other institutions, and see how they all work together to achieve your goals. You can also consider opening a cash management account as an attractive alternative to a bank account or using it to hold cash while you wait to contribute to your accumulated IRA. E-Trade is a great versatile broker but stands out best for its fundamental research which can be especially valuable to newer investors or those who have no other source of research. The broker's standard price for mutual funds is on the lower side, and it also offers thousands of funds with no transaction fees.

ETFs and stocks can be traded commission-free as is standard for online brokers. Betterment is one of the largest and most popular robotic advisors and can take your 401(k) renewal money and build a balanced retirement portfolio. Betterment uses funds from 13 different asset classes to build its portfolios, offering a wide range of diversified investments. If you're interested in investing with social impact, Betterment can add these funds to your portfolio. Charles Schwab is strong in all categories and serves customers well from novice to expert. If you're looking to buy the same mutual funds you had in your 401(k) or buy some of the cheaper variants of the Schwab brand, then the broker will likely deliver with their thousands of funds at no transaction fee. You have 60 days from the date you receive distribution from an IRA or retirement plan to transfer it to another plan or IRA.

The IRS may waive the 60-day renewal requirement in certain situations if you missed the deadline due to circumstances beyond its control. A cumulative IRA allows you to consolidate your old 401(k) and other workplace retirement accounts throughout your career. You can continue to save for retirement and have control, flexibility, and a centralized view of your investments.1 With Fidelity, you have a wide range of investment options including us managing your money for you. You'll get exceptional service as well as planning and guidance from our team. A 401(k) renewal occurs when you move money from an old employer-sponsored retirement plan such as a 401(k) to an individual retirement account or IRA. If you're close to retirement or changing jobs, you may need to transfer your retirement savings to a new account. An accumulated IRA is an account used to transfer money from old employer-sponsored retirement plans such as 401(k)s to an IRA.

One benefit of renewing an IRA is that when done correctly the money maintains its tax-deferred status and does not generate taxes or penalties for early withdrawal.2Section 1.408-4 (b) (ii) of the proposed Treasury Regulation published in 1981 and IRS Publication 590-A Contributions to Individual Retirement Arrangements (IRAs) interpreted this limitation to apply on a per-IRA basis meaning that a transfer from one IRA to another would not affect a reinvestment involving another IRA from the same person. With a direct transfer from an employer-sponsored plan to an IRA your plan administrator delivers your distribution directly to the financial provider where your accumulated IRA is located. There are generally no tax implications if you complete a direct renewal and the assets move directly from your employer-sponsored plan to a Rollover or Traditional IRA through a trustee-to-trustee transfer. If your employer sends you a cumulative distribution check in your name you can deposit it directly into your IRA Rollover. A main difference between a traditional or Roth IRA and an accumulated IRA is that you can transfer all the money you want into the accumulated IRA.3If you mix IRA contributions and IRA renewal funds in one account it can be difficult to transfer the accumulated funds back to a 401(k) if for example you start a new job with an employer who has a stellar 401(k) plan. A reinvestment is when you move funds from one eligible retirement plan to another such as from a 401(k) to an accumulated IRA.4.

Ruthie Cacibauda
Ruthie Cacibauda

Passionate creator. Freelance coffee geek. Unapologetic tv trailblazer. Professional internet junkie. Wannabe music lover. Hipster-friendly beer geek.

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