As soon as you leave a job, your 401(k) savings can be converted to an IRA; however, beware of tax implications before doing so.
Direct rollover involves your old plan administrator cutting you a check and depositing it directly into your new retirement account, so as to avoid incurring any taxes or penalties.
Betterment
Betterment is one of the largest robo-advisors that can take your rollover and create a diverse retirement portfolio for you. Their minimum investment is only $10 while fees for their funds are reasonable.
Signing up begins by asking you several questions, including your age and income level. Next comes setting goals like savings for emergencies or retirement account balance targets as well as general investing strategies and assets allocation goals that you should pursue.
Betterment offers 13 asset class-focused ETFs as its core portfolio, while its flexible portfolio allows you to customize weightings. Furthermore, there are four cryptocurrency and three social impact investing portfolios as well as an APY of 4.50% with its savings account. Betterment is regulated under the Investment Advisors Act of 1940 by external auditors; furthermore it belongs to both FINRA and SIPC for compliance.
Wealthfront
Wealthfront is an innovative robo-advisor offering comprehensive investment and financial advisory services. Users answer a series of questions to assess their goals and risk tolerance before Wealthfront builds them a customized portfolio with tax loss harvesting, automatic rebalancing, tax loss harvesting and automatic tax loss harvesting – all for free with accounts guaranteed by both FDIC and SIPC up to $100,000 in insurance protection.
Wealthfront offers various accounts and investment portfolio styles – individual and joint brokerage accounts; trusts; traditional, Roth, rollover IRAs; SEPs and 529 accounts are just some of the options it provides. Socially Responsible, Classic, Direct Indexing are among its offerings as well.
This firm provides a mobile experience that’s user-friendly and straightforward, using drop-down menus and sliders to reduce typing errors while providing two-factor authentication upon login. Furthermore, the platform supports unlimited transfer-in and withdrawals (though larger withdrawals may take several business days to process). Categories offer a way of organizing funds for short-term goals in your Cash account easily accessible from its homepage.
Fidelity
Converting from a 401(k) to an IRA provides greater investment freedom, reduced fees and consolidation of retirement savings in one convenient account. But it’s essential that you consider which account best meets your needs based on personal considerations and situation.
Every brokerage and robo-advisor has its own process, so to avoid complications you’ll need to carefully follow instructions. You’ll be asked for personal information like name, social security number, date of birth and account information where the money will be rolled over into.
Betterment is an award-winning robo-advisor that can take your 401(k) rollover funds and create an asset allocation that reflects them across 13 asset classes, offering social impact investments. Their fee schedule may even be less costly than your old employer’s plan fees!
Schwab
Schwab offers low fees, automated investing solutions and 24-hour customer service. Customers can take advantage of its Investor Checking account and online trading platform free of charge as well as integration with Google Assistant and Amazon Alexa for stock quotes, market updates and watch lists.
Schwab provides its retirement clients with the Schwab Intelligent Income26 retirement solution, which uses machine learning to help create an investment portfolio designed to generate steady income streams. Furthermore, it offers them free robo-advisory service.
To roll over your 401(k), it is necessary to request a distribution from your old plan administrator and deposit it directly into a tax-deferred account in a tax-deferred account such as an IRA or employer-sponsored retirement plan. This process is known as direct rollover; completion can be achieved via check made payable directly to that entity. Failing to follow proper procedures could render any withdrawal taxable and subject to an early withdrawal penalty tax.