Transferring Your 401K – What You Need to Know

When you transfer 401K from your old company to a new account, there are certain changes that must take place. Through these changes, there are aspects that must be considered in order to ensure that you do not lose any of the funds through the process in which you are making the transfer.

Once you have changed employment, as people do multiple times throughout their career, as they find themselves moving from company to company, there is a certain form which must be filled out in order to inform the employer of the change that is being made to the account and therefore this form allows the employer to move the funds for the employee, to the new retirement account that has been opened. Before making an attempt to move these funds that have accumulated in the account, one should ensure that they meet all of the guidelines and stipulations that come from this process.

To avoid any penalties that may occur through this process, it is important to ensure that you choose the direct transfer option, rather than cashing out the money that has been accumulated within the account and then transferring the money into a new account. Penalties can be upwards of ten percent if you do not ensure that the money has been transferred directly and therefore it is important to avoid this option.

There are many times limits that are imposed on these types of accounts, giving account holders a maximum of two months to make the switch before penalties accrue on the amount that has been transferred. contact an investment consultant to learn everything that you need to know about transferring your 401K.