Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

June 25, 2013
How do I rollover my 401(k) plan?

Q: I am 61 and have quit working. I have a 401(k) from my company. How and where do I decide to roll it over for my best retirement planning?

Rose
Kansas

A: You can have your 401(k) plan directly transfer your funds to an IRA you've established. A direct rollover is simply a transfer of assets from your 401(k) trustee or custodian to the trustee or custodian of another account (a "trustee-to-trustee transfer"). It's an easy process that allows your retirement savings to remain tax deferred. By completing the necessary paperwork, your 401(k) funds move directly to your old employer's retirement plan or to your new IRA. Also, as long as you directly roll over your 401(k) retirement plan and follow the federal rollover rules, no federal income tax will be withheld.

There are many investment options, but the most common rollover choices are mutual fund companies and brokerage accounts. The best pick often depends on what investment choices you want to make. For example, if you plan to buy all no-load funds, such as Vanguard funds, opening an IRA account with that institution is the most cost-efficient.

However, if you want a variety of funds, stocks and/or bonds, then a brokerage like Fidelity or Schwab might be a better choice for you. For most of my clients and investors in general, rolling over your 401(k)/retirement funds into an IRA typically offers the most investment options. Aligning yourself with an advisor is often a great choice, so you do not have to navigate the markets alone. To find an advisor, you can check resources like CFP.net, IMCA.org or FPAnet.org.

This response is for information purposes only. Kimberly Foss, CFP, CPWA, and Empyrion Wealth Management do not endorse any of the above products, companies or strategies. Before acting on any issue covered in this response, it is important to speak with your financial planner, CPA, insurance agent or attorney since they are most familiar with your situation.

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at cbuck@sacbee.com

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.



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