- 1). Transfer your retirement plan to another employer, if available. This is known as a direct 401k rollover. Your 401k administrator will have you fill out a few forms. The forms will describe the amount of money you will roll over to your current employer. You will also get the account information for your new retirement plan. A direct 401k rollover is most common because you do not pay tax penalties for withdrawal.
- 2). Move your retirement to an IRA. By choosing to roll over your assets to an IRA, you are vested with more options than a direct 401k rollover. IRAs are trusts or custodial accounts such as mutual funds, stocks and bonds. There are costs with this type of rollover. Your 401k administrator will give you the appropriate paper to fill out. You will also be informed of the costs. After you have filled out the appropriate forms, you can invest your money as you see fit. You will no longer be limited by your previous employer's retirement plan options.
- 3). Cash out your 401k. You can choose to roll over your assets directly to yourself. This can be done before the age of 59 1/2, but you will incur tax penalties of 10 percent and withholding requirements with this form of rollover. There is a 20 percent withholding fee, even if you decided to put the money into an IRA later. After you have filled out the necessary forms from your 401k administrator, you will receive a check minus taxes and withholdings.
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