I need to move my 401K from a past employer, what is the best way to do that so I don’t get hit with huge fees? Where is the best place to put the money?

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Individuals 12 months 2 Answer 338 views 0

About Lisa Nason, MAcc, CPA

Small Business, Expatriates Lisa has more than twenty years of experience preparing tax returns for businesses and individuals, including income tax, property tax, state and local tax, sales & use tax, etc. She also works on estate and trust returns as well as assisting with tax planning, tax audits, and bookkeeping. Nason Accounting, LLC is a Greenville, SC based full service certified public accounting firm that helps businesses and individuals increase and preserve their financial net worth. They provide accurate and timely accounting information that is vital for any individual or business.

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  1. Lisa Nason, MAcc, CPA

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    A direct rollover is probably your best bet. Find a good financial advisory – open up an IRA account – it will usually be coded as a rollover account. The adviser can assist you with where to invest the actual money. Then you will have to fill out some paperwork from your old employer to roll over the money directly into your new IRA. This is where the money is sent directly from the fiduciary of your employer’s 401K plan to the account you set up with the financial advisory. In general, I have never seen fees involved with this transfer, although in some cases there may be an annual fee for the IRA. This is usually around $40-50 and many times they give you the option of having the fee taken out of the account or sending you a bill and you can just pay the fee each year with funds out of the account.

  2. Lisa Nason, MAcc, CPA

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    The most effective means of transferring 401(k) investment is to have the employer’s 401(k) trustee do a direct rollover (trustee-to-trustee rollover) into your newly established IRA account. There is no way to avoid the fees..either the IRA trustee will deduct directly from the IRA or you can send a check from separate non-IRA funds.
    If you plan to stay employed at the company where you have the 401(k) account, and the invesrtments are doing well, it might be a good idea to leave it there for now. If you need the money, you can take a loan up to $50,000 and re-pay over 5 years. Here too, there are fees connected to your account. Most employees never really look at the quarterly statement. You should. It tells you a lot.

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