What is a 401k rollover and how long does it take?

401k rollover

Now more than ever people are switching jobs and for a good reason. It is not because they hate their boss, but simply because they found a better opportunity and they know what a great asset they can be.  Most likely than not, their pay is higher and their experience in the field is clearly rising. Regardless of the change, the individual is now faced with multiple 401k accounts. What happens then? How long does it actually take for the 401k rollover to process? We further discuss your questions below.


401K Rollover Explained

If you have multiple 401k accounts from different employers or only have one account and are considering merging the earnings into one, a 401k rollover allows you to do this by “rolling over” the money into an Individual Retirement Account (IRA). There is sometimes the second option for your old 401k account to roll over to your new employer’s plan. Pretty simple, right? If you are sticking to the second option, you can continue to reap the benefits. But like any legal retirement plan, it has its pros and cons. You might ask, “is there a catch to a 401k rollover to an IRA account?”, well the answer is that it depends on many factors. In general, a 401k rollover works as an account savings fee with more access to investments like stocks, index mutual funds or any ETF to that matter without the high account fees. With this in mind, a 401k employer account itself should not cost more than one percent on the expense ratio.  


Start Today 

Making the switch from a 401k rollover to an IRA account is simple. You can start by choosing the type of IRA account. Remember that, unlike a Roth IRA, taxes are deferred. The next step is to open the account which can be done by deciding on which individual investments you will make. The third step is to fill out the necessary paperwork and complete a direct rollover so that you pay no extra fees for wiring your own money. Lastly, you can begin to select your investments accordingly. Typically individuals will invest in low-cost index mutual funds so that there are no high risks in using large stocks or bonds. 


401K Rollover Process

It does not take long for a 401k rollover process. A 401k rollover process typically takes 2-4 weeks. However, the transfer of the old 401k account to the new IRA should be made within 60 days. 


We can help get your 401K rollover process started by creating a retirement plan that works best for you! Care Financial is a privately owned and operated business providing families, individuals and businesses with comprehensive wealth management strategies. Contact us online at www.carefinaicialonline.com or call us at 251-633-7122.