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Best Rollover IRA

Updated on November 23, 2010

Managing Your Rollover Retirement Account

As an employee, you will have the opportunity to prepare for your retirement by making contributions to employer-sponsored retirement accounts through the 401(k) plan of your company. When you hit upon greener pastures and you decide to leave your current employer, there are normally four options that you can execute. You can leave your contributed funds with your present company, wherein you will not make further contributions, transfer your contributions to your new company’s retirement account, take your money out of the plan or move your funds to another type of retirement investing, known as the Individual Retirement Account (IRA). If you prefer the rollover option, there are some things you need to carry out, so you can get the best rollover IRA.

Some people find it very tempting and alluring to cash out their hard-earned money from the 401(k) plan, but the setbacks are quite huge. You will not only lose ten percent of your account’s total value due to federal taxes, you will also incur another ten percent penalty to be deducted in your account because of your early withdrawal. The most intelligent thing to do is to rollover your existing retirement plan to an Individual Retirement Account (IRA). It is also worth looking into the differences between IRA vs Self DIrected IRA. This by far can be your best option since your account will only sustain lesser management fees.

Set Up a Rollover IRA

You can get hold of the best rollover IRA, if you appropriately identify what type of IRA you want to convert your account into. You should examine all of your requirements and assess whether your preferred IRA meets your retirement needs. While you have the privilege to roll over your account from your previous employer to a new type of IRA, you should discern if you plan to make further contributions. You should also study how you can make distributions in your preferred IRA and most importantly, you should learn about its tax implications.

So what are the steps you need to accomplish to acquire the most efficient rollover IRA? You must initially communicate with your plan administrator or your former employer to start your distributions or withdrawals. If you have retirement accounts of both Roth and pre-tax in 403(b), 401(k), or 457(b) government retirement plans, you should open an account with both Roth IRA and Traditional IRA. Keeping your contributions separate from one another can help you maintain the tax benefits incorporated in different plans. Get more information on a Roth vs Traditional IRAs.

What makes the Best Rollver IRA?

The best rollover IRA will not only allow you to preserve your retirement savings tax-deferred but will grant you with more investment options as well. Usually, when you rollover your company sponsored retirement plan into an IRA, you will not pay for taxes since your previous company’s retirement account will make the distribution check payable to your selected IRA custodian. Though, there are broader choices of investments in your new IRA, your account may still be invested in similar kinds of assets you had in your former company plan.

You can benefit most from your account, if you go for diversified funds instead of investing in several different kinds of funds. This step will assist you to keep the charges and fees low while you take advantage of the optimum rates of return of your rollover retirement plan.

401(k) Rollover Guide


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    • KKalmes profile image

      KKalmes 7 years ago from Chicago, Illinois

      thank you Ricky, now as soon as I find a job and start saving money again I know what to do with it.

    • profile image

      Joyce 8 years ago

      I have approx. $70k that I had rolled over into an IRA (Masterdex 10 Anunity). Was this a good investment? If not, where should I have put this? What would I be penalized to roll this over to something else?