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marmoset's avatar

Steps for switching a 401k at one bank to an IRA at another bank?

Asked by marmoset (1311points) December 18th, 2023
5 responses
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I have a 401k at bank A – I want to end up with its same contents in an IRA at bank B.

What are my best steps to do this? Should I roll it over to an IRA at bank A first, then do an in kind transfer of the new IRA to bank B?

And is there any advantage to making this happen by the end of the calendar year? (I’m many years away from anticipated withdrawals from any retirement acct, but might it simplify tax filing or anything else?)

I never worked for the company in question (I received the 401k a few years ago via QDRO) and can’t imagine I ever would

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Zaku's avatar

I don’t know about best, but I did recently do something like this. The procedure is to find a new company you want to manage it, then ask both companies what to do. In my case, it involved going to the web site of the new company and generating a letter of intent to move the account, and calling both companies a few times until they took care of it. Then choosing a new environmentally-responsible investment at the new company, using their web site.

seawulf575's avatar

I would talk to the two banks to ensure you are meeting their rules. I just rolled over some IRAs and basically Bank A closed the account, sent me a check with paperwork showing it was going to Bank B. I then gave the check to Bank B and they opened up the new account. The paper trail shows it wasn’t an early withdrawal (so no tax/penalty) and all was good. Except with the VA, but that’s a whole other issue.

Caravanfan's avatar

Talk to the second bank. They will help you with the forms.

JLeslie's avatar

@Caravanfan has the right answer.

If you are moving the full amount from one financial institution to another (direct rollover) the financial institution you are moving it to will be happy to help you. Make sure they are opening the correct type of account for you. You could ask two financial institutions as @seawulf575 suggested of you want to feel very comfortable. Or, ask your accountant and the place you are moving the money to.

If you are dealing with well established companies like Fidelity, Vanguard, Schwab, they will be very knowledgeable.

If you just left your company and the money is being issued to you, you only have one or two months (check it) to put the money into an IRA to avoid taxes and penalties. This is very specific to leaving a company That’s an indirect rollover and I don’t recommend it. If you are not leaving a company I would not have a check cut to you as @seawulf575 did. That doesn’t sound ok the way I understand the law, even though his intent is obvious. I’m just not 100% sure, I could be wrong.

It sounds like you are wanting to do a direct rollover/transfer.

zenvelo's avatar

Do NOT have a check cut to you. You don’t want to have custody of the funds at any point, but have it transferred from tax exempt fund to another.

Even getting a check cut and then you endorsing it to another bank without cashing it can be considered you having accepted custody of the funds. When I left a job almost 20 years ago and rolled my 401K into an IRA, the firms involved were quite adamant about this.

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