To read part one, click here!


It’s important to keep in mind that plans vary, and some are significantly better than others, so take an in-depth look at the specifics of the plans offered. Limited retail class shares and additional record keeping fees and charges may help make your decision to stick with your 401(k) and table the IRA option. However, if you’ve explored the options and have decided to rollover to an IRA, here are the steps you need to take in order to see the process through.

Things will vary depending on the plan offered as well as your current employer-sponsored plan that will be rolling over into your IRA, so it’s best to contact the custodian (the bank or brokerage selected to safeguard the assets of your IRA) to know the process for your specific plan.

Step One

Look at your most recent statement, and I mean really look at it, right down to the custodian and their phone number. Understand it wholly, make yourself familiar with the money types in your plan and ask yourself important questions like, are you fully vested? Have you been contributing Roth money or is everything traditional? These things play a role in the kind of IRA you should open, as well as what balance you’ll receive when yo roll over, so pay careful attention.

Step Two

Review your 402f. This is also known as the Special Tax and Distribution Notice, which is a document that outlines all of your options as well as all of the tax consequences of those options for your employer-sponsored plan. While it’s often a wordy and intimidating document, I recommend taking a hard look at it. The law actually requires you to confirm that you’ve reviewed the document within the last six months (180 days) when you are conducting a rollover and, depending on your custodian, you may have the option of viewing this document online before beginning the transaction.

Step Three

Now it’s time to open your IRA account. First thing’s first: what kind of money is in your employer-sponsored plan–such as a 401(k) or 403(b)–Roth or Traditional? Or both? This will determine whether or not you’ll have to have two IRA accounts, and if you end up with two, it’s important to (obviously) direct Roth money to your Roth IRA and Traditional money to your Traditional IRA. Another thing to keep in mind: combining funds from a 401(k) or 403(b) and an existing IRA plan could potentially prevent you from ever transferring the money into another employer-sponsored plan in the future.