Your 401(k) offers tax-deductible contributions, tax-deferred growth of earnings potential and a variety of investment options — so it’s a great tool for building retirement savings. Yet like all tools, your 401(k) must be used properly to get the best results. That’s why you should review your 401(k) at least annually and make whatever adjustments are needed.

Depending on where you work, you may get some 401(k) review help from your plan provider. But if that assistance isn’t available, you might want to consult with a financial professional to make sure you’re getting the maximum benefit from your plan.

As you begin to review your 401(k), your first question should probably be this:

“How much should I contribute?” at the very least, try to put in enough to receive your employer’s matching contribution, if one is offered. if you don’t earn this match, you are essentially walking away from “free money.” Beyond this, though, the amount you put into your 401(k) might depend on what other retirement savings vehicles you have available. For instance, if you’re eligible, you may also want to contribute to a Roth IRA, which offers tax-free growth potential, provided you’ve had your account for five years and don’t start taking withdrawals until you’re 59½.

Of course, it’s not only how much you put into your 401(k) that determines its success — it’s also how you choose to allocate your investment dollars. (Keep in mind that asset allocation does not guarantee a profit or protect against loss.) Your 401(k) may have a dozen or more investment choices, such as stock funds, bond funds and money market funds. To choose the right investment mix, you’ll need to consider a variety of factors, including these:

• Your age — Generally speaking, the younger you are, the more aggressive you can afford to be with your 401(k) investments, because you’ll have decades in which to potentially overcome the inevitable down periods of the market. as you get older, you may wish to invest somewhat more conservatively, but you’ll still need some growth potential in your 401(k) portfolio.

• Your goals — everyone has different goals for retirement. you might want to retire early and travel the world, while your co-worker desires to work as long as possible and then, upon retirement, stay close to home and pursue hobbies. because you each have different goals, with different income needs, you also may need to follow different investment strategies within your 401(k).

• Your other retirement income sources — if you have a variety of retirement income sources — a pension from another job, an IRA, a spouse with generous retirement benefits — you may need to invest differently, perhaps less aggressively, than if you had fewer options for retirement income.

Apart from putting away as much as you can into your 401(k) and choosing the right investment mix, what else can you do to get the most out of your plan? Here’s a suggestion: if you have worked at various jobs and acquired multiple 401(k)s, consider rolling them over into one account. you might save money on fees and reduce paperwork, but more importantly, you’ll be able to concentrate your resources and pursue a unified investment approach, with your investment dollars working together toward your ultimate retirement goals.

as you can see, a 401(k) review and rollover can reward you in many ways — so do whatever it takes to maximize your 401(k)’s performance.

<a href="http://www.garnernews.net/view/full_story/12355385/article-Financial-Focus?instance=secondary_opinion_left_columntag:news.google.com,2005:cluster=http://www.garnernews.net/view/full_story/12355385/article-Financial-Focus?instance=secondary_opinion_left_columnTue, 15 Mar 2011 15:18:31 GMT 00:00″>Financial Focus

The Difference between an IRA and 401K

the difference between the IRA and 401k when broken down to its simplest form, is the level of control you have on your account. This control works in the collection of your investment and keep the account.

401k is set up by the employer and the employer makes decisions on investment options will be available, and the company to manage and maintain your account. the employer usually offer a couple of options plan for how your money is invested, any plan to invest your money in a variety of different investments and are generally grouped according to the amount of risk involved in each group. You can choose a plan with lower yields plans that offer less risk and at risk with higher returns. some people, such as limiting their ability because they do not want to go through the work of collection of each individual investment.

IRA retirement account is an autonomous, which means that it is self-directed. You go by yourself and choose the company that will handle your account, and have control over your investment choice from each of an unlimited number of background options. You can invest in a variety of stocks, bonds, money market accounts, etc. If you find all these options can be overwhelming always speak with a financial advisor for the financial institution you choose to manage their accounts and ask questions before you to feel comfortable make your decisions. Even though your employer may have limited options for the types of 401Ks you would be able to put in place, you can implement a set of accounts as a traditional IRA, Roth, etc. that have an impact on your taxes and save your goals.

while all this may seem confusing and difficult to understand, try to remember what is important is that you’re saving for retirement, and you can always ask questions and learn more. Do not overwhelm the point of stop investing. Although the difference between an IRA and 401k is your level of control, it is important to remember the greatest similarity, both are on the road to retirement savings.

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The Difference Between an IRA and 401K

Saving for retirement is essential in today’s world, and the younger you are when you start, the better off you will be. if you are getting ready to plan for your retirement, you will find that there are numerous investment options to choose from. while many people have retirement accounts through their place of employment, lots of individuals decide to invest additional money on their own. One type of investment product that is quite popular is the Roth IRA. The Roth IRA has been around since 1998 and offers investors the advantage of tax free growth among other things. if you are contemplating opening such an account here is what you need to know.

First, the advantages. Roth IRA accounts are simple to get started and there is a variety on investment options for the money you contribute. you can disperse your money in products like mutual funds, stocks, CD’s, real estate and more. even better, all of the money you contribute to the IRA will grow tax free.

Unlike other types of retirement accounts, you will not get penalized if you decide to withdraw from the funds you have contributed to the account, no matter what your age. In addition, when you turn 59 ½ you can start to take out the earned money without paying any fees.

If you are ready to buy a home and need additional funds, you can withdraw money from your Roth IRA to help with your down payment. you can even withdraw account earnings in the amount of up to $10,000. The only stipulation is that the home you are purchasing must be your primary residence and not a vacation or investment property.

Another great advantage or the Roth IRA, unlike other retirement products, is that you do not have to start taking funds out of the account by a certain age. also, if you were to die, your account is transferred to your beneficiary (usually your spouse) who can combine it with their account, penalty free.

As you can see the benefits of having a Roth IRA are great, but before you open your account you should also consider the cons.

First off, all of your contributions to the Roth IRA will be taxed up front and your contributions do not reduce your adjusted gross income for the year. Contributions to regular IRA’s and other retirement plans will adjust your annual gross income.

There are also strict income limitations and if you do not meet them, you cannot even open a Roth IRA account. if you do open a Roth IRA and down the road your income increases past the income cap, you will no longer be able to contribute funds to your account. In addition, you are only allowed to contribute a certain amount of money each year. Currently if you are 49 years old or younger you can contribute$5,000 per year and if you are 50 years or older you can contribute $6,000 per year.

Finally, if you need to tap into your account earnings before the age of 59 ½, early withdrawal fees come with the price tag of 10%.

Pros and Cons for Roth IRAs – American Consumer News

So you’re ready to take advantage of recent government legislation that makes it easier and cheaper to convert your rollover IRA funds to a Roth IRA? That’s great! Let’s look at the process in more detail so that you know what to expect.

Step 1 – Open a Roth IRA

If you’re at this point in the process, you’ve already rolled your old employer’s 401k or 403b retirement funds into an traditional rollover IRA account, which means you’ve already done the hard work of choosing an IRA account provider and moving your funds out of their original plans.

In most cases, you’ll want to open your Roth IRA account with the same provider that holds your rollover IRA. this is the easiest course of action, although you may want to change providers if you’ve been unhappy with the customer service or investment options at your current provider.

Whether you decide to stick with your old provider or choose a new one, your first step in the Rollover IRA/Roth IRA conversion process is to open a Roth IRA account. Typically, all you’ll need to do is fill out a form with your personal information – the provider will take care of the rest.

Step 2 – Fill out the Conversion Paperwork

If you decide to stay with the same IRA account provider, you’ll need to fill out a form they provide that details how the conversion will occur. You’ll use this form to let the provider know how much of your funds should be converted and whether or not you’d like the provider to withhold any tax from the transfer. You’ll likely need to have this document notarized and sign your name to indicate that you’ll be liable for the Roth IRA tax.

If you choose to open your account with a new provider, your paperwork may be a little more complicated, since you’ll need to transfer your funds between providers and from a traditional IRA to a Roth IRA. However, it shouldn’t be that much more complicated than the documentation you completed to move your funds from the original 401k account to your rollover IRA. If you have any questions, a customer service representative should be able to help walk you through the process.

Step 3 – Select your Roth IRA Investments

Once you’ve completed the necessary paperwork, your provider will handle the rest of the transaction. the Roth IRA transfer will take anywhere from a few hours to a week or two, depending on your provider. after the funds have been deposited into your Roth IRA account, you’ll need to choose your investment options, just as you did with your 401k and rollover IRA accounts in the past. a qualified financial advisor can assist you if you aren’t sure which options to choose.

In the future, when it comes time to pay taxes on your Roth IRA conversion, you’ll need to watch for mailed statements from your account provider. Typically, you’ll receive a Form 1099R which shows how much money was converted to your Roth IRA. this will need to be included on your annual income taxes; otherwise, you could face serious Roth IRA penalties

The Rollover IRA/Roth IRA Conversion Process – What You Need to Know

Source: Vanguard, 14 Sept.2010

Finance experts have said that the new pension guidelines may increase pension coverage in Nigeria from the currently dismal level, but that funds under the new codes would have to be properly appraised if pension funds are to be safe. last week, Nigeria’s Pension Commission (PENCOM) released the much awaited exposure draft on the new guidelines on investment of pension funds. Pension Fund Administrators (PFA) and other interested stakeholders are expected to forward suggested amendments to the exposure draft on or before Friday, September 17, after which the draft becomes finalised and ratified by PENCOM as new set of regulations.

Highlights in the guidelines include more investment options that PFAs can choose from, as well as the proposal of a new eligibility criteria for appointments of heads of investment of the Pension Fund Administrator, which experts say may involve the commission stipulating some academic criteria in addition to the minimum experience previously required.

It also stated that principal officers of PFAs are prohibited from making investment decisions where a conflict of interest exists, and are required to report to the commission on a quarterly basis in an advised format.

Investment limits

The new draft guidelines, among other changes, gave new limits to the investments options of Pension Fund Administrators. it states that PFAs shall only invest in eligible bond/debt instruments issued by states and local governments that have fully implemented the Contributory Pension Scheme and that all bonds/debt instruments in which pension funds are to be invested, which exceeds 7 years maturity shall be inflation-indexed, though it did not specify if it included FGN issuances.

It also states that pension funds can now be invested in the following allowable instruments such as supranational bonds issued by multilateral development finance organisations, of which Nigeria is a member, subject to a maximum portfolio limit of 20 percent of pension assets under management; Specialist Investment Funds such as infrastructure funds and private equity funds subject to 5 percent of pension assets under management.

“Pension funds can be invested only in an infrastructure project situated within Nigeria, subject to maximum limit of 20 percent of funds under management,” it states. Pension fund assets can be invested in bonds/debt instruments issued by any state or local government that meets rating provisions with a maximum portfolio limit of 30 percent of pension assets under management.

“Pension fund assets can only be invested in ordinary shares of public limited companies if the public limited liability company has made taxable profits and paid dividends/issued bonus shares within the preceding five (5) years. Pension fund assets can be invested in Private Equity (PE) Funds, subject to pre-approval by the Commission” and may be invested in ordinary shares of corporate entities, subject to a maximum portfolio limit of 25 percent of pension assets under management.

Investment in money market

The guidelines states that PFAs can now invest in money market instruments of a bank, with minimum credit rating of BBB by at least 2 recognised rating agencies – down from minimum rating of A previously. it stated that any corporate entity that issues Commercial Papers in which pension funds are to be invested shall have a minimum credit rating of ‘BBB’ by at least two recognised credit rating companies.

Room for improvement
Pension Fund Administrators were not previously allowed to directly invest in Commercial Papers without deposit money bank guarantees. This guideline now allows PFA’s invest directly a maximum of 10 percent in Commercial Papers of corporate entities, which experts say increases the depth and number of instruments available.

Renaissance Capital, an investment banking firm, says the new draft guidelines would increase pension coverage in the country. according to the firm, PFA’s investment in state and local government bonds/debts would increase pension coverage.

It, however, says the requirement for long tenured bonds and debt instruments to be inflation indexed “is novel” and adds that, excluding REIT’s, most of the investment options are all new asset classes which were introduced with the new draft. “PFA’s are now permitted to invest directly in commercial papers of corporate entities without a financial intermediary or the underlying guarantee of same.”

The firm also called for more appraisals on state and local government bonds, and other sources, if PFA’s would invest in them. “Investment in state or local government bonds must be readily marketable and must be for specific projects with direct socio economic benefits. This requires additional appraisal of state and local government bonds before investment.”

The Commission has also stated that PFAs shall henceforth pay a penalty for willful violation of approved investment limits. “Penalty shall be the value of the excess over the approved limit,” the draft stated, introducing its first penalty for wilful violation.

Nigerian Bank Nigeria

Nigerian Bank Nigeria – New Draft Guidelines To Increase Pension …

One of the questions we’re frequently asked by clients is what to do with their company sponsored retirement plan once they leave their employ. our response is inevitably “don’t forget to take it with you.” When it comes to leaving your retirement account with your employer’s plan or rolling it into an IRA instead, rolling over the proceeds has some great advantages:

Wider investment selection

Most company sponsored plans have limited investment options; what’s more, the investment options available usually are not enough to create a well-diversified portfolio. by rolling your money into an IRA at a discount brokerage firm, you gain access to the entire fund universe, in addition to the ability to invest in exchange-traded funds, individual stocks, bonds and CDs. this wider selection of investment options has two main benefits: it increases your ability to diversify your portfolio, which ultimately results in reducing the amount of risk you are taking, and provides for the potential to improve returns because you now have access to the best performing investments rather than being limited by your plan selections.

Increased Ease of Management

It is not uncommon for a person to switch employers 2-3 times, or more, over their career. Imagine if at each job, you participated in a company-sponsored retirement plan, but rather than rolling the account over into an IRA when you severed ties with your employer, you left your money behind. Pretty soon, you will have the daunting task of keeping track of multiple accounts and making sure that your investments do not overlap. The easiest way to avoid such a headache is to roll over any eligible company retirement plans into a single IRA. Not only will it cut back the amount of paperwork you receive, but it will also make your overall portfolio easier to manage. in addition, in the future when it may become necessary for you to start tapping your retirement savings, creating an income stream will be made simpler by having your funds consolidated in one account.

More Flexibility with Beneficiaries

In most company-sponsored retirement plans, if you are married your spouse must be named 100% primary beneficiary of your account, and if he/she is not you must have your spouse’s consent in writing to not be named as primary beneficiary. this is not the case with an IRA, where you can name whomever and however many beneficiaries you want for your account. this flexibility can be important, especially in situations of a second marriage, where an account holder may want to leave his/her retirement account to their children rather than a new spouse.

Once you have made the decision to roll that company retirement account over into an IRA there are a few things you should keep in mind so as to avoid a run-in with the IRS:

Request a DIRECT ROLLOVER of your account – which usually means that the company’s plan trustee will either directly transfer your account assets to your designated IRA custodian or cut a check for proceeds made out to same custodian. You do NOT want your company plan trustee to send you a check made out to you; otherwise the IRS will look at this transaction as a distribution, for which taxes will be owed.

If you do happen to receive a check in your name from your company’s retirement plan, you can still avoid paying taxes (and a 10% premature distribution penalty if you are under age 59 &frac12;) by depositing the check into an IRA within 60 days of the date of distribution. Remember, the full amount distributed, including any amount automatically withheld for taxes by your employer, must be deposited into the IRA in order to qualify the transaction as a rollover; this means you may have to come up with the cash to cover any tax withholdings, but you will get this amount back when you file your tax return for the year.

Whether you are switching jobs or leaving the workforce for good, it makes the best sense to take your money with you by directly rolling it into an IRA. doing so will save you a lot of time and effort in the future when it comes to managing your investments and eventual distributions. most importantly, it provides an opportunity to improve your portfolio’s long-term return by putting the best performing investments at your fingertips.

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Rollover IRAs – Don't Forget to Take Your Company Retirement Plan …

SUMMARY

The market finally recovered some ground after five back-to-back monthly losses, and my portfolio benefitted from the market’s sudden enthusiasm too with a nice gain of 3.98%, the largest monthly gain in a while. since my portfolio is decidedly under-exposed compared to my benchmark, my monthly gain is dwarfed by the benchmark’s 4.45% expansion. On a year-to-date basis, both my portfolio and the benchmark lost about 3.30%.

TRANSACTIONS

I made some shuffling in my mutual fund positions to embrace the newly available option of BrokerageLink — a 401(k) plan feature that allows participants to expand investment options to almost all stocks and mutual funds. As such, I dropped Russell International Growth and ING International value (NIIVX), bought more of Harbor International (HIINX) and USAA Precious Metals and Minerals (USAGX).

In addition, I moved more U.S. dollars to Chinese Yuan on my “carry trade” experiment. by the end of the month, I have about one seventh of my portfolio in Chinese Yuan, yielding handsomely from gradual, predictable appreciation of the currency. (Starting from this month, I’m breaking our my Chinese Yuan positions from the “Cash/Fixed Income” category.)

Also, I had to pull some money out of my portfolio to repay some 0% APR credit card debt that is coming due. This, of course, reduced the leverage of my portfolio.

READ FULL POST …

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Portfolio Update – April 2008 (Up 3.98%)

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Every week, it seems, a new story surfaces about a retiree whose golden years have been ruined by an investment scam. the stories are depressingly similar. They begin with people struggling to make ends meet. then come telephone sales pitches, free-lunch seminars, friendly but pushy “advisors,” and promises of high returns coupled with absolute safety. the stories inevitably end with huge losses and shattered lives.

Yet you have to invest your retirement nest egg somewhere. And you want to get the best possible return on your investment, both to have enough to live on, and to ensure that it won’t be eaten up by withdrawals and inflation. how can you be sure that an investment “opportunity” isn’t really a scam? Follow these six guidelines:

1. Stay away from strangers who solicit your business.

There are plenty of reputable mutual fund companies (e.g. Vanguard and Fidelity) that offer extensive online and offline resources to help prospective customers choose wisely among their many investment options. And there are plenty of well-known full-service brokerage firms that will manage your money for a fee (e.g. Merrill Lynch, Wells Fargo, Morgan Stanley). They’re easy to find on the Internet or in the phone book. in any event, you’re better off seeking out your own investment vehicles or investment advisor than waiting for someone to come to you. Anyone who cold-calls you or offers free seminars is suspect. Well-established, reputable firms don’t do these things because they don’t have to.

2. Remember that there is no “magical” solution

This is the most important guideline of all. You may look at the size of your nest egg, and at the amount of money you need to live on, and conclude that you need a 20% annual return. the unfortunate reality is that no such investment exists that isn’t ridiculously risky–or an out-and-out fraud. And contrary to popular belief, even the experts can’t consistently beat the historical averages of 10% or so per year for stocks and 5-7% for bonds. Yes, hedge fund managers sometimes manage to squeeze out an extra percent or two–but only at considerable risk.

3. consider managing your own money through no-load mutual funds

Unless you’re totally uncomfortable with numbers and percentages, you can put together your own retirement investment portfolio. Stick to the basics: a money-market fund for immediate cash needs; a short, intermediate, or Ginnie Mae bond fund for reliable income; and a broad-based index stock fund for growth. the only open question is asset allocation among these tried-and-true investment vehicles. the sooner you’ll need the money, the more you should lean toward cash and bonds, and away from stocks. use the major mutual fund companies’ retirement planning guides. They’re free, and trustworthy.

4. never be pressured

Anyone who tries to hurry or pressure you into investing is unprofessional at best, and is probably a scammer. break off contact with them and go elsewhere. Period.

5. get detailed info about commissions, surrender charges, and guarantees in writing

If you’re dealing with an investment advisor or broker, get a clear statement of what you’re being promised, and what it will cost, in writing. if you don’t understand it, consult a trusted, uninvolved person, e.g. your adult children or your accountant.

6. Don’t hesitate to check with regulators

If you have the slightest uncertainty, contact your state securities department, state insurance department, or the Securities and Exchange Commission, and ask for information about the company you’re dealing with. Even if this takes some time, it’s worth it. if you’re being rushed, or if the company you’re negotiating with reassures you that this isn’t necessary, don’t deal with them. Reputable firms have nothing to hide, and welcome clients who are cautious and diligent.

Once again, above all, remember point #2, which, in a nutshell, is this: if it seems too good to be true, it is.

Ed Garrison is Executive Director of the American Association of Future Retirees and is a frequent contributor to its blog, The Future Retiree.

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How to Avoid Retirement Investment Scams

an Insight into 401k to IRA Rollover

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What is a 401k rollover to IRA? a 401k rollover is the procedure of moving retirement savings from a work-sponsored 401k plan to another retirement investment vehicle, i.e. 401K into an Individual Retirement Account (IRA). Rolling your 401k over to an IRA allows you to keep your retirement savings tax-deferred and typically gives you a broader choice of investments. one major advantage of rolling over your retirement plan into an IRA is that you are in full control of your retirement funds, particularly if you choose a self-directed IRA. you can change investment options within the IRA based on the investment products that your investment advisor offers. Choosing to roll the money over to an IRA is the best option for those employees who are interested in building a comfortable retirement fund, as a rollover helps your retirement savings maintain their tax-deferred status and continue growing for retirement. Rolling over your 401k accounts from different employers into a single IRA allows the investor to consolidate all retirement savings balances, making it easier to manage retirement investments. you can also take your money out of your IRA at any time, although any withdrawn amount may be subject to taxes and penalties. an IRA rollover allows an investor to

* Preserve the tax-deferred status of retirement savings.

* Increase investment options.

* move money out of a former employer’s retirement plan without tax or penalties.

* take control of your retirement plan.

* Reduce the cost of administration.

How to rollover 401k funds to IRARolling over a 401k to an IRA is one of the smartest things one can do with the retirement plan. Follow these steps to rollover 401k funds into an IRA.

* Open a rollover IRA account at the financial institution of your choice – Open a rollover IRA account at the financial institution (bank, brokerage firm, mutual fund company, etc.) of your choice. The financial institution you choose will give you a form that authorizes a direct rollover once you open the account. Make sure that your financial institution complies with the U.S. Patriot Act.

* Read your 401k-plan literature – Determine whether your 401K charges a fee for either selling funds in your account or for an outgoing account transfer. If your 401K charges fees for an outgoing account transfer, ask your new IRA custodian to cover those fees.

* Check rollover eligibility with your old 401k provider – you may be able to transfer existing mutual fund shares held in your 401k to an IRA at a brokerage firm. Check with your old 401k providers and new IRA custodian, to determine whether it is permissible. If it is not allowed, your mutual funds must be liquidated.

* Deposit the check on time – Make sure the proceeds from your 401K are deposited in your chosen financial institution within 60 days of the date the check was sent out.

Other available OptionsApart from rolling over to an IRA, you have other options as well when you are changing your job.

* Undertake a 401k rollover to the new employer’s 401k plan – Choosing to transfer money to the new employer’s retirement plan, prevents an employee from having to maintain multiple 401k accounts. Although this option simplifies things for an employee, it is advisable to review the investment options of the new 401k plans into which he is rolling over his previous account.

* Leave the funds in the former employer’s 401k plan – an employee can choose to leave his funds in the former employer’s 401k plan, by paying record keeping and other charges to the account administrator to manage the account. a change of employment of an employee does not affect his 401k accounts with a previous employer.

Withdraw the funds from the retirement plan – this option allows an employee to take the money out of the retirement plan. Taxes and early withdrawal penalties can often reach 50%, drastically reducing the retirement investment balance.

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Check it out: An Insight into 401k to IRA Rollover

An Insight into 401k to IRA Rollover – christopherwire’s blog

An Insight Into 401k to IRA Rollover – christopherwire's blog …

An Insight Into 401k to IRA Rollover

Image : http://www.flickr.com

What is a 401k rollover to IRA? A 401k rollover is the procedure of moving retirement savings from a work-sponsored 401k plan to another retirement investment vehicle, i.e. 401K into an Individual Retirement Account (IRA). Rolling your 401k over to an IRA allows you to keep your retirement savings tax-deferred and typically gives you a broader choice of investments. one major advantage of rolling over your retirement plan into an IRA is that you are in full control of your retirement funds, particularly if you choose a self-directed IRA. You can change investment options within the IRA based on the investment products that your investment advisor offers. Choosing to roll the money over to an IRA is the best option for those employees who are interested in building a comfortable retirement fund, as a rollover helps your retirement savings maintain their tax-deferred status and continue growing for retirement. Rolling over your 401k accounts from different employers into a single IRA allows the investor to consolidate all retirement savings balances, making it easier to manage retirement investments. You can also take your money out of your IRA at any time, although any withdrawn amount may be subject to taxes and penalties. An IRA rollover allows an investor to

* Preserve the tax-deferred status of retirement savings.

* Increase investment options.

* move money out of a former employer’s retirement plan without tax or penalties.

* take control of your retirement plan.

* Reduce the cost of administration.

How to rollover 401k funds to IRARolling over a 401k to an IRA is one of the smartest things one can do with the retirement plan. Follow these steps to rollover 401k funds into an IRA.

* Open a rollover IRA account at the financial institution of your choice – Open a rollover IRA account at the financial institution (bank, brokerage firm, mutual fund company, etc.) of your choice. The financial institution you choose will give you a form that authorizes a direct rollover once you open the account. Make sure that your financial institution complies with the U.S. Patriot Act.

* Read your 401k-plan literature – Determine whether your 401K charges a fee for either selling funds in your account or for an outgoing account transfer. If your 401K charges fees for an outgoing account transfer, ask your new IRA custodian to cover those fees.

* Check rollover eligibility with your old 401k provider – You may be able to transfer existing mutual fund shares held in your 401k to an IRA at a brokerage firm. Check with your old 401k providers and new IRA custodian, to determine whether it is permissible. If it is not allowed, your mutual funds must be liquidated.

* Deposit the check on time – Make sure the proceeds from your 401K are deposited in your chosen financial institution within 60 days of the date the check was sent out.

Other available OptionsApart from rolling over to an IRA, you have other options as well when you are changing your job.

* Undertake a 401k rollover to the new employer’s 401k plan – Choosing to transfer money to the new employer’s retirement plan, prevents an employee from having to maintain multiple 401k accounts. Although this option simplifies things for an employee, it is advisable to review the investment options of the new 401k plans into which he is rolling over his previous account.

* Leave the funds in the former employer’s 401k plan – An employee can choose to leave his funds in the former employer’s 401k plan, by paying record keeping and other charges to the account administrator to manage the account. A change of employment of an employee does not affect his 401k accounts with a previous employer.

Withdraw the funds from the retirement plan – This option allows an employee to take the money out of the retirement plan. Taxes and early withdrawal penalties can often reach 50%, drastically reducing the retirement investment balance.

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Check it out: An Insight Into 401k to IRA Rollover

An Insight Into 401k to IRA Rollover – christopherwire's blog