Rolling Over Your 401k? Easy Peasy!

by Marc Bastow | April 4, 2013 10:35 am

A colleague of mine recently found himself in a great spot at a great time: He planned to roll a 401k plan from a previous employer (a great spot) into an IRA prior to the April 15 IRS tax filing deadline (great timing, as it gives him the chance to pick which tax year his contribution will fall under).

Of course, you don’t need great timing to enjoy the benefits of rolling over your 401k into an IRA. Funding an IRA — at any time of the year — is a great step toward your eventual retirement, and depending on your income and whether you have a retirement plan at work, has the added benefit of a tax deduction. (However, contributions to a Roth IRA are not tax-deductible.)

Better still, it’s easy to do. Simply ask for a transfer form through either your account custodian, existing brokerage account or benefits plan administrator, and fill it out.

There are two options for receiving the rollover distribution:

Like I said, easy. Just keep in mind a few caveats:

If you choose to take the 401k proceeds payment in your own name, keep an accurate record of when and where you deposited it to an IRA. The Transferor will spit out a 1099-R statement to the IRS detailing the payment of funds, and you must be able to prove you made a deposit into an IRA account within the 60 day limit.

With regard to a payment directly to the IRA account, be sure the check is made out to the correct entity (bank or financial services name) referencing the correct person (For Benefit of Marc Bastow) and an accurately named account (IRA Account #1234).

The easy part is making the decision to proceed with the rollover itself, and the process isn’t that bad, either — maybe the only source of aggravation is just making sure all the I’s are dotted. On the upside, every brokerage house will have a customer service rep that can help you along the way, so don’t be shy about using the phone if you’re unsure.

Marc Bastow is an Assistant Editor at

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