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?
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.