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401K Rollovers & 401K Rollover Options

Perhaps you’ve left your job but still have a 401K or Roth 401K with your former employer; you’re retiring and are wondering if leaving your money in a 401K is the best option; or perhaps you simply want to diversify—now what?  There are four options to consider when asking the question: How do I rollover a 401K? –  leave your assets in a previous employer’s 401K plan, cash out your 401K, initiate a 401K rollover into a new employer’s plan, or rollover into a Traditional IRA  or Roth IRA.

There are many factors to keep in mind when considering a 401K rollover. Some include where you’re at in your career, your current financial status, and your tax and investment preferences. You should consider all of your options before making a decision, and can use the information provided here to help. If you decide a rollover is right for you, contact a Research Financial Strategies Rollover Consultant at 301-294-7500

401K Rollover Choices

  • Rollover 401K to an IRA
  • Rollover 401K to another 401K
  • Rollover 401K to a Roth IRA
  • Leave it at your past employer


Leaving behind an old 401K can be a costly mistake. Here’s what you need to know about 401K rollovers.

What is a 401K rollover?
When you leave a job, you may not realize that the money in your employer-sponsored 401K plan can leave with you.  A 401K rollover allows you to transfer your balance into another retirement account — like an individual retirement account (IRA) or your new employer’s 401K plan — all while still keeping the money tax-deferred.

For many people, the best choice may be to convert a 401K into an IRA, which will open the door to more investment choices. Of course, you can also leave your 401K with your old employer, if you’re happy with their plan. However, if you do that, you won’t be able to make additional contributions to it. Most 401Ks have the ability to grow 3 ways. Your payroll contributions, investment appreciation and employer matching contributions.

The three main types of 401K rollovers are:

  • 401K to Traditional IRAAllows you to keep your money tax-deferred, and may offer more investment options, possibly with lower fees.
  • 401K to Roth IRAAlso allows you to keep your money tax-deferred & offers access to more investment options, though you’ll pay taxes on the rolled amount because it will be treated like a Roth conversion. The exception is if you’re rolling over a Roth 401K
  • Old 401K to 401K with a new employer: May be a sensible choice if you prioritize keeping your money in one account, and if your new employer’s plan allows rollovers and offers low-cost investment options (more on fees below). Transferring a 401K to a new employer is relatively easy and has benefits in keeping all of your money in one place. Plus, Research Financial Strategies offers ongoing 401K portfolio advice for customers who maintain their 401Ks within their employer’s system. We help you select the right funds to try to maximize your investment returns in a way that is right for you. We continually keep you informed through regular portfolio check-ups.

Typical 401K rollover questions we receive from our clients are:  Why roll over a 401K?,  How do I roll over a 401K? and  Where can I find the right provider to roll over a 401K?

Why should I roll over my 401K?
The decision of whether to roll over your 401K to an IRA will depend on several factors. For many people, an IRA can offer benefits not found in a 401K, including:

  • Lower fees: Research Financial Strategies is an IRA provider through the extensive Schwab network. That allows us to provide investment choices such as low fee ETFs to our customers as compared to most employer sponsored 401K plans that may frequently charge participants costly administrative fees.
  • Large investment selection: The typical 401K offers a curated selection of 20 or so investments. In a Roth IRA and a Traditional IRA, you’ll receive access to a range of investment options, including stocks, bonds, mutual funds, index funds and exchange-traded funds (ETFs). That wider selection gives Research Financial Strategies the ability to tailor a financial plan that is right for you and your family.  Over many years, even small fees can have a big impact on overall retirement savings, which is why we want to minimize them wherever we can. Employer offered 401Ks usually use mutual funds with high fees. Our investment plans specialize in low cost ETFs to help make you achieve higher returns in the long run.
    Read more: Mutual Funds vs ETFs
  • Access to low-cost advice: For many people, selecting investments is a confusing and stressful experience that often leads to sub-optimal portfolio construction and investment returns. If your new 401K provider doesn’t offer professional investment guidance and you want assistance, you can roll over your old 401K into an IRA at Research Financial Strategies.
    Read more: Should I pay Someone To Manage My 401K?

How to roll over a 401K to an IRA or Roth IRA
There’s a right way to do this and a wrong way. You don’t want the 401K provider to cut a check in your name, and you don’t want to cash out your balance. In both scenarios, you’re at risk of owing up to a third of your balance to the IRS.

To protect your 401K balance from unnecessary taxes and penalties, there are certain steps you must take.


  • Decide whether you want a Roth IRA vs a Traditional IRA. If you roll into a Roth IRA, you’ll owe taxes on the rolled amount.
  • Open a rollover IRA account. Research Financial Strategies offers a wide range of investment possibilities to fit exactly what you need.
  • Ask your 401K plan for a “direct rollover.” These two words are important: They mean that the 401K plan will cut a check directly to your new IRA account, not to you personally.
  • Choose your investments. Since your retirement savings will enter the IRA as cash, Research Financial Strategies will meet with you to discuss your current financial situation and future goals to determine the best way to invest your 401K funds
    Read more: The drawbacks of target date retirement funds

Where to open a Retirement Account
If you’ve decided a rollover is right for you, the next step is to make sure you find the best account provider to suit your needs. That choice starts with knowing your investing style, risk tolerance and long term goals.


Research Financial Strategies provides our clients with a reproducible, non-emotional investment process using technical analysis to monitor market risk within the industries, sectors, and our actual investment decisions. It starts first with understanding our client’s financial goals & needs and helping them plan for the future.

Technical analysis is an emotionless investment decision making process that does not allow for getting caught up in the company or industry story. Investments are made through a series of technical factors. The most notable factor is one called “relative strength.” When a security price shows a recognizable pattern of higher highs and higher lows it demonstrates that there is higher demand than supply for that security. This means that the “buyers” are in control and not the “sellers.” While we cannot guarantee investment performance, securities that demonstrate this technical behavior have a higher probability of increasing in value.

Research Financial Strategies offers ongoing portfolio advice for clients who maintain their 401Ks within their existing employer’s system. Whether you are selecting the right funds to try to maximize your investment returns, or selecting more conservative choices to protect assets – we can help.

Should you pay someone to manage your company’s 401k?  With the stock market reaching new highs and its’ recent volatility, you may be wondering what to do with your 401K retirement plan.  Many confused investors are turning to managed accounts in their 401K & TSP plans in which they pay a fee to have professionals make these decisions. Research Financial Strategies offers ongoing management of your employer 401K for a small fee. Our years of experience will help navigate your retirement plan toward your goals.

401K Investment Choices
Note that the investments you select are the biggest driver of your portfolio’s growth.  Plus, selecting the right provider is critical for keeping fees low and gaining access to the investments and resources you need to manage your savings. We at Research Financial Strategies will guide you through all the obstacles to help you invest in what is right for you and your family.