Should You Roll Over Your Retirement Account?

(February 2025)

In This Article

Yes, you can roll over your retirement account if you’re changing jobs or looking to consolidate your retirement savings. And the reason is simple. It allows you to maintain tax-deferred growth and potentially access a broader range of investment options than you likely have with your previous plan.

However, you need to carefully consider the fees, investment choices, and any employer match benefits you’re going to lose in the process. Read this article until the end to have a clearer understanding of how to roll over your retirement account.

1. Evaluate Current Retirement Account Options

To roll over your retirement account, evaluate current retirement account options. Consider factors such as fees, investment choices, and account services. Compare these with what other providers offer to ensure you’re getting the best value.

Look at your plan’s investment options and any associated costs, and assess whether the current plan aligns with your long-term financial goals. As you evaluate these elements, you position yourself to make an informed decision about rolling over your retirement account.

2. Choose a New Account Provider

To roll over your retirement account, choose a new account provider. Focus on finding one that best aligns with your financial goals and offers favorable terms. Consider factors such as fees, investment options, account features, and customer service.

Research different providers and compare their offerings to ensure they meet your needs. It’s important to select a provider with a strong reputation and the ability to support your long-term retirement strategy effectively. Make sure you understand any associated costs and benefits before making your final decision.

3. Open a New Retirement Account

To roll over your retirement account, open a new retirement account. Once choose a provider, complete the application process, which typically involves providing personal information and selecting account preferences. This new account is where you’re going to direct the funds from your old account, so make sure it’s set up correctly before initiating the transfer.

4. Contact the Old Account Administrator

To roll over your retirement account, contact the old account administrator. Reach out to request a rollover and confirm the details you need to transfer your funds. The administrator provides instructions on how to proceed and can require you to fill out specific forms. Make sure to ask about any potential fees or restrictions and verify the timeline for the transfer. This step is necessary to ensure a smooth transition of your retirement savings to your new account without incurring unnecessary penalties or delays.

5. Complete Necessary Paperwork

To roll over your retirement account, complete necessary paperwork both your current plan administrator and the new account provider provide. This paperwork typically includes information about your personal details, account numbers, and instructions for the transfer. Make sure to carefully review all forms to ensure accuracy and avoid any delays.

You also need to provide identification or additional documentation, so gather these documents in advance. Properly completing this step ensures a smooth and successful rollover of your retirement funds.

6. Transfer Funds to the New Account

To roll over your retirement account, transfer funds to the new account. This usually involves completing a transfer request form with your new account provider and providing the new provider with details about your old account. Ensure you follow the specific instructions from both your old and new account administrators to avoid any delays or errors. Verify that the correct execution of the transfer and that the funds arrive into your new account to maintain your retirement savings’ tax-deferred status.

7. Review and Adjust Investments in the New Account

To roll over your retirement account, review and adjust investments in the new account. Take the time to analyze the available investment options, ensuring they match your retirement strategy. You need to rebalance your portfolio, diversify assets, or update your investment choices based on your time horizon and retirement objectives. Regularly monitoring and adjusting your investments help you stay on track and maximize the growth potential of your retirement savings.

Common Pitfalls to Avoid in Rolling Over Your Retirement Account

  • Neglecting to compare fees: Different accounts have varying fees. Ensure you understand the fee structure of your new account compared to the old one to avoid unnecessary costs that can erode your savings.
  • Overlooking investment choices: Before completing the rollover, review the investment options available in your new account. Avoid choosing a plan with limited or unsuitable investment choices that are not likely to meet your retirement goals.
  • Missing deadlines: You must complete a rollover within a specific timeframe to avoid tax penalties. Make sure you adhere to these deadlines to prevent unintended tax consequences.
  • Failing to check for penalties: Some accounts have penalties for early withdrawals or rollovers. Verify whether any penalties apply to your old account and ensure they are not going to impact your rollover.
  • Ignoring tax implications: Be aware of how a rollover affects your taxes. A direct rollover (trustee-to-trustee transfer) avoids taxes, but an indirect rollover, where you receive the funds first, triggers tax liabilities if you fail to deposit it into a new account within 60 days.
  • Forgetting to update beneficiaries: After rolling over your account, remember to update your beneficiary designations. This ensures that your retirement savings go to the person you designate in case of your passing.

Recap

To successfully roll over your retirement account, start by evaluating your current retirement account options and choosing a new account provider that suits your needs. Open the new retirement account and then contact the administrator of your old account to request a rollover. Complete all necessary paperwork to facilitate the transfer of funds. Once you move the funds to your new account, take the time to review and adjust your investments to align with your retirement goals. This process ensures that your savings continue to grow effectively and meet your future financial needs.

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