What Accounts Can I Roll My 401k Into?
Roll your old 401(k) savings into an individual retirement account (IRA). This enables you to keep all your retirement savings together in one convenient location while avoiding fees associated with former employer’s plan.
Make sure not to withdraw the funds yourself as this could trigger taxes and penalties. Instead, ask your old employer to send a distribution check directly to your new financial institution for depositing into an IRA account.
Betterment
Betterment stands out among its competition by offering key features at an accessible price point. Its automated portfolios utilize exchange-traded funds to target specific goals while striving to minimize fees and tax loss harvesting; additionally, Betterment also offers tax loss harvesting and socially responsible investments with its $100,000 minimum account size requiring newcomers.
Betterment’s signup process takes you through a series of questions designed to help you establish your financial goals, such as savings for emergencies or major purchases, retirement investments or investing for retirement. They then recommend an asset allocation and savings plan tailored specifically to each of these goals.
The site is accessible on desktops and mobile devices alike. It provides individual and joint taxable brokerage accounts, traditional and Roth IRAs, SEP-IRAs and rollovers from other IRAs or 401(k)s, comprehensive cash management accounts with competitive interest rates and comprehensive educational resources and articles to help users make sound financial decisions.
Wealthfront
If you are transitioning from an employer-sponsored plan, rolling over your 401(k) can significantly lower the management fees you incur and can have a dramatic effect on long-term investment returns. However, any net unrealized appreciation (NUA) in stocks you owned within that plan will still be taxed accordingly.
Wealthfront is a robo-advisor that uses an algorithm to assemble a diversified portfolio of low-cost exchange-traded funds. You can choose among three portfolio options, Classic, Socially Responsible, and Smart Beta; each designed using Modern Portfolio Theory in mind in order to maximize returns while mitigating risk.
Wealthfront is an ideal option for hands-off investors and retirement planners looking to minimize fees and commissions. Offering both taxable investments and IRAs, as well as numerous tools such as automatic tax loss harvesting, the platform offers multiple accounts as well as a robust mobile app – it makes Wealthfront an excellent way to manage retirement planning without incurring high fees and commissions.
Fidelity
This company provides several options for retirement savings, including Traditional, Roth, SIMPLE and SEP IRAs with some of the lowest fees in the industry. However, before making your final decision on any investment it is crucial that all associated fees are thoroughly understood before making an informed decision.
Fidelity also offers advice through its Schwab Intelligent Portfolios Premium robo-advisor, which creates, monitors and rebalances an individualized portfolio tailored to your goals – for just 0.45% per year! This service can also help clients save money through tax efficiency.
Before rolling your 401(k) into an IRA, it’s essential that you understand its tax ramifications. A direct rollover is often the best method of moving funds; this involves sending checks directly from your old employer to your IRA custodian instead of yourself; this ensures your rollover won’t be subject to taxes and ensures your investments will not automatically make themselves. Additionally, don’t forget that investments made within an IRA won’t happen automatically and that they must be chosen manually instead.
Ameriprise
Rolling over your 401(k) into an IRA allows you to access more investment options – from mutual funds and stocks, as well as traditional retirement savings products – so that you can better meet your retirement savings goals. However, it is important to weigh the risks before taking this decision.
An indirect rollover is typically the easiest and fastest way to transfer a 401(k). Your plan administrator will issue you with a distribution check which must be deposited into an IRA within 60 days or be considered taxable and may incur penalties from Uncle Sam.
If you are contemplating switching your 401(k) over to Ameriprise, keep in mind they are an insurance provider and offer many of their own products which often carry commissions and hidden fees that add up quickly. To learn more, reach out to a financial advisor for advice.
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