Many today find themselves separated from previous employers. When they left, voluntary or involuntary, one of the things they may have left behind was their 401(k) or associated personal retirement account. Does this apply to you?
People leave this behind for several reasons. Some of those reasons include:
- Did not know I could move it.
- It was doing well where it was.
- Have no idea how to move it.
- I do not want to pay taxes on that money.
Additionally, some people actually move it to a new employer’s 401(k). While moving it is not a problem, many people do so in order to allow them to tap into the account in the future for a loan. Not a good idea. Another subject, another time.
Back to those accounts that are still with previous employers. Did you know that your opportunities for investment are much greater in an account with a brokerage firm? In most 401(k)’s the investment funds are lacking when compared to all the available funds to invest in. As you may leave a company, take this opportunity to move to a new account.
Roll over your funds to a qualified IRA Rollover account. This account will allow you to move your 401(k), 403(b), etc. account to another tax deferred account. When done properly, there are no taxes incurred in this transfer.
How do you do it?
- Find your new account brokerage firm
- Open an IRA Rollover account.
- Work with your new company to determine all account info to allow for a smooth transfer.
- Fill out the appropriate paperwork with the old company and initiate the transfer.
In most cases, your former account will be liquidated and the cash transferred to your new account. Once there it is time to find the best investment opportunities and watch your money grow.