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Get our comprehensive step-by-step guide to making an informed rollover decision. Includes 10 critical questions, fee comparison worksheets, tax implications, and a timeline checklist.
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A step-by-step guide to help you make an informed rollover decision. Download and print this checklist to ensure you've considered all the important factors before moving your retirement funds.
| Fee Type | Current 401(k) | Rollover IRA | New Employer 401(k) |
|---|---|---|---|
| Annual administrative/recordkeeping fee | $ | $ | $ |
| Average fund expense ratio | % | % | % |
| Advisory/wrap fee (if applicable) | % | % | % |
| Trading commissions | $ | $ | $ |
| Account closure/transfer fee | $ | N/A | N/A |
| Estimated total annual cost | $ | $ | $ |
Tip: Multiply your balance by the total percentage fees to see the dollar impact. A 0.50% difference on $200,000 = $1,000/year.
| Scenario | Tax Consequence |
|---|---|
| Direct rollover (401k → Traditional IRA or new 401k) | No taxes owed; funds transfer tax-deferred |
| Direct rollover (Traditional 401k → Roth IRA) | Full amount is taxable income in the year of conversion |
| Indirect (60-day) rollover | 20% mandatory withholding; must deposit full amount within 60 days to avoid taxes & penalties |
| Cashing out | Taxable income + 10% early withdrawal penalty if under 59½ |
| Net Unrealized Appreciation (NUA) | Company stock can be distributed in-kind; only cost basis is taxed as ordinary income; gains taxed at long-term capital gains rates when sold |
Action item: Consult a tax professional if you're considering a Roth conversion or NUA strategy.
| Step | Target Date | Completed |
|---|---|---|
| Review current plan documents and fee disclosures | Week 1 | |
| Open receiving account (IRA or new 401k) | Week 1–2 | |
| Request rollover paperwork from current plan administrator | Week 2 | |
| Confirm rollover type: direct (trustee-to-trustee) recommended | Week 2 | |
| Submit completed forms; specify check payable to new custodian FBO [Your Name] | Week 2–3 | |
| Track distribution and confirm receipt at new custodian | Week 3–6 | |
| Verify funds are invested according to your allocation | Week 4–7 | |
| File records for tax documentation (Form 1099-R, Form 5498) | By tax season |
Note: Direct rollovers typically take 2–4 weeks. Avoid the 60-day indirect rollover unless absolutely necessary.
| If… | Consider… |
|---|---|
| Current plan has excellent low-cost funds and strong creditor protection | Staying put |
| You're 55–59½ and may need early access | Keeping funds in 401(k) (Rule of 55) |
| You want broader investment choices and lower fees elsewhere | Rolling to an IRA |
| Your new employer has a stellar plan that accepts rollovers | Rolling to the new 401(k) |
| You hold appreciated company stock | Evaluating NUA before rolling over |
| You plan to do Backdoor Roth contributions | Rolling to a 401(k), not an IRA |
Rolling over your 401(k) is an important decision with lasting implications. Let us help you evaluate your options and make the best choice for your retirement goals.
Schedule Free ConsultationEssential statistics and insights to help you make informed decisions about your retirement future.
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