Ways & How

How to Move Retirement Funds

How to Move Retirement Funds

Financial planning is a huge part of retirement. You may want to learn about different investment vehicles so that you are aware of your options for retirement funds. Even if you already have one, you can still transfer it from one to another account without paying huge fees or tax penalties. You have two options when moving retirement funds: roll over or trustee-to-trustee transfer. Follow the steps on how to move retirement funds to get started.

  1. Decide between a roll over and trustee-to-trustee transfer. A roll over requires you to liquidate all your securities in your old retirement fund first. You then receive a check corresponding to that full amount, and you have 60 days to deposit it into your new chosen retirement account. If you go over 60 days, you incur serious tax penalties. On the other hand, if you choose a trustee-to-trustee transfer, the amount in your old retirement account is transferred directly to the new one without incurring penalties, and you are not required to liquidate securities.

  2. Determine your eligibility.

    You always need to meet certain requirements for any investment account. For instance, if you want to transfer your 401k account funds to a traditional Individual Retirement Account or IRA, you cannot be employed at the same institution that helps fund your 401k account. You have to either quit your job or retire. Do research into eligibility requirements to find out if you are a good fit for the new investment account that you are eyeing.

  3. Select a new investment provider. Consider the fees involved, the various investment and funding options, whether policies are in place to make investing easier, and reputation with the Securities and Exchange Commission, among other details, before choosing. You might even choose to stay with your current provider.

  4. Open a new retirement account. Retirement accounts come in different forms. Most people have 401k accounts, which they want to transfer in a traditional Individual Retirement Account or IRA. You can also choose to transfer it into a Roth IRA account. Ask your new investment provider regarding where you can move your retirement funds to find out the steps on how to do it without incurring penalties.

  5. Make contributions to your new retirement account. Once you moved your retirement funds to your new retirement account, start funding it with contributions. The rules depend on the investment account type. Take note that most contributions are done annually. Additionally, you can only move your retirement funds from one account to the other once per year.

Knowing how to move retirement funds enables you to shop for options as to what retirement fund is best for you. It is very common for employees to have a 401k retirement plan, but as the years go by, this may not be the best investment account in terms of taxes and contributions. Knowing your options helps you maximize your finances so that you can enjoy your retirement in the future.


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