In fact, when you want to roll over a 401(k), your company may put up roadblocks, according to a 2013 Government Accounting Office (GAO) report. Often, this study found, the company won’t explain all the possible alternatives; they might mislead you about account charges; or they might encourage you to rollover the 401(k) to an IRA within the same institution, whether or not that’s the best choice.
We have a better idea. Betterment makes rollovers simple and efficient—minimizing your time spent and keeping costs low, which is essential to maximizing your money’s growth.
How to Roll Over a 401(k)
Setting up a rollover IRA is free, and it takes five minutes or less with Betterment. If you don’t already have one, create a Betterment account with an IRA goal to receive the funds (click “Rollover” at the top right-hand side of your Summary page).
We’ll send you a personalized email explaining how to set up the transfer. Then, contact your 401(k) provider and let them know that you’re rolling over the funds. Your provider will move the funds via check to us (or they may send a check to you directly and you would forward it to Betterment). The same applies for any other employer-sponsored plan.
Apples to Apples
Remember that a traditional, tax-deferred 401(k) should be rolled over to a traditional IRA (or else you will have to pay taxes on it). If you happen to have a Roth 401(k), you can roll over those funds to a Roth IRA. If you’re not sure what type of retirement account you have, and which rollover account to set up, our guide makes it really easy.
If you try to roll over a 401(k) to a Roth IRA, that’s considered a Roth conversion and you’d likely owe taxes on that money.
Note that Betterment is not a tax advisor, and nothing in this article constitutes tax advice. If you have tax questions, consult a tax professional.
(If you’re wondering about how to roll over an IRA, you can do that with Betterment, as well.)
Ask About Fees
It’s free to set up a Betterment rollover IRA, but your 401(k) provider may charge you for closing the account. If you’re doing a partial rollover of your 401(k) funds, ask whether you will incur any fees.
Once your Betterment rollover account is set up, remember that you enjoy some of the lowest investing fees in the industry.
Whatever you do, don’t let minor hurdles with your provider or former company prevent you from making the smart choice for your money. Keep it growing, with Betterment.