One of your 401K rollover options is to take your money with you to a new employer, moving your funds to the new employer’s fund management company. This means that the new employer’s fund manager will help you transfer your retirement funds from your previous employer, and you can manage them at your current job along with your new contributions. This kind of roll over, from one company’s plan to the new company’s plan, helps you to avoid having money at many different employers, which would require that you continue to keep track of multiple accounts from your previous employers’ fund managers. Moving it all into one place is easier to manage.,

But you also have the option of moving all of your retirement account funds to what’s known as a self directed 401K. This is an account you open at a brokerage company on your own, and then the money is transferred by your new broker into a new retirement account. You must have the broker initiate the transfer, you cannot withdraw your retirement money from your old job, and then deposit it, or you will suffer a high penalty. Instead, doing a rollover of your money into a broker account of your choice is even better than a roll over to your new employer. You will have many more investment options available to you, beyond just those offered by your employer’s management company. You can keep that account open and invest in whatever you like, and if you make future job changes, continue to roll over all of your collected retirement funds into that brokerage account.

If you have a choice between doing a rollover to your new employer, or rolling over your 401K into your own self directed account, you are likely better off having an account your have total control over.

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You have spent years contributing to your 401k, now that you need to make a change, don’t undo those years of hard work. It is tempting, when contemplating a 401k rollover to decide to cash out. Much better that you roll it to your new 401k account, or if you have lost your job like so many people, put it into an IRA.

If you are lucky enough to be switching jobs, put the money back to work for you by doing a straight forward rollover 401k. The fee structure will be the lowest available to you. The money you contribute will come out pre-tax and you are probably eligible for matching contributions from your employer.

As I said, if you are in the sad position of losing your job, you have to put the money somewhere and you should pick an IRA brokerage. Do some research on fees and funds available at various firms. One of the nice things about a 401k rollover-IRA is that you have a lot more control over your money. You, not some fund manager in New York, will be in control of where your money goes. Do you believe in investing in gold? With an IRA you can make that part of your portfolio (Never put all of your money into a commodity like gold).

Whatever your situation, protect your retirement nest egg with a little bit of research and planning. Once you know the basics of a 401k rollover, you are in control of your money and your future.

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