How To Rollover Your 401k 💸 (4 Simple Steps)

TL;DR

Learn how to rollover your 401k into a new retirement account, and why it's important to do so.

Transcript

• What we're going to be talking about in this video today, is how to rollover your 401k. A lot of people are clueless when it comes to retirement accounts, and the different things that you can do. They have these old 401ks that may be sitting around, that they just don't know what to do with. One of the options that you have is to rollover your 4... Read More

Key Insights

• 🤗 The choice of where to open a new retirement account for your rollover depends on your preferences for fees, self-direction, or managed portfolios.
• 🤣 Rolling over a 401k into a Traditional IRA is the most common option, but consider a Roth IRA or SEP IRA for specific tax benefits or self-employment situations.
• 🥶 M1 Finance and Betterment are recommended platforms for fee-free and managed rollovers, respectively.
• 🧑‍🤝‍🧑 Understand the investing strategy you want to pursue, whether it's self-directed with ETFs and individual stocks or a more hands-off approach with target-date funds or managed portfolios.

Questions & Answers

Q: Why should I consider rolling over my 401k?

Rolling over your 401k allows you to take control of your investments and potentially reduce fees. It also helps consolidate your retirement savings into a single account for better organization.

Q: Can I rollover my 401k into an existing IRA?

Yes, if you already have an IRA, you may be able to consolidate your 401k and IRA into a single account. Contact your IRA provider to inquire about the rollover process.

Q: What is the difference between a Traditional IRA and a Roth IRA?

A Traditional IRA allows you to contribute pre-tax income and pay taxes upon withdrawal in retirement, while a Roth IRA requires after-tax contributions but offers tax-free withdrawals in retirement.

Q: What are the advantages of using Betterment for a rollover?

Betterment offers a managed portfolio, automated rebalancing, tax coordination, and a low annual management fee of 0.25%. Their rollover process is streamlined and supported by a dedicated team.

Summary & Key Takeaways

• Not all 401ks are created equally, and if you have a bad or old 401k, it's important to consider rollover options.

• Two recommended options for fee-free rollovers are M1 Finance (for self-directed investors) and Betterment (for managed portfolios).

• Consider the type of account you want to open, such as a Traditional IRA, Roth IRA, SEP IRA, or rolling into a new 401k.

• Choose an investing strategy based on your preferences, whether self-directed or a more passive approach.

• Follow the rollover procedure outlined by your current 401k provider, and deposit the funds into your new retirement account within 60 days.