IRA/401(K) Roll-Overs

ira 401k

Many Americans have placed money in qualified retirement plans such as a 401(k)s, 403(b)s Simplified Employee Pension Individual Retirement Accounts (SEP-IRAs), Individual Retirement Account (IRA)s or other qualified plans.

A 401k (or other qualified plan) roll-over is a process that allows for a direct transfer of assets to be made between retirement plans.

Examples of retirement plans that might be involved in a 401k roll-over include: 401k plans and 403(b)s.


Conventional retirement wisdom you hear and read often recommends that when you leave a job, you should rollover your 401(k) to an IRA. If you do transfer money from your 401(k) plan with your former employee to an IRA, you can continue to delaying paying taxes on the money inside your qualified plan. You can also avoid an early-withdrawal penalty. But if you have an especially good 401(k) with your old company, it may be better to leave your retirement money there.

There are a number of financial considerations and pitfalls to be aware of as you consider making a roll-over from your 401(k) to an IRA. Some common mistakes:

  • You can overpay fees and loads on your IRA
  • you can have too many retirement accounts that are not coordinated with themselves or your other assets (and are therefore less effective than they could be)
  • You neglect to take advantage of tax savings strategies
  • You put too much of your IRA at risk in the market

Roll-over regulations can be confusing. The IRS has produced a chart showing whether a rollover is permitted. Click here to view the IRS Roll-Over Chart

Fortunately, with a little knowledge you can avoid common mistakes and make informed decisions that will help you get the most benefit from your qualified retirement plans.

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