What happens when you switch careers, but want to hang out to your retirement fnd? Don’t worry. A transfer is quick, easy, and relatively uncomplicated.
If you’ve contributed to a 401(k) or 403(b) account, you can transfer any funds you deposited plus their growth. Unfortunately, employer-contributed funds may not necessarily be able to move with you and will be subject to vesting.
Here’s how to make sure that you can successfully transfer your retirement fund.
1. Set up a new account
There are a few ways to go about this. If your new employer offers a 401(k) plan, you can set it up with the Human Resources representative or your boss. If your new boss does not sponsor a 401(k) plan, you have the option in opening a traditional Individual retirement account (IRA) or Roth IRA.
But, beware! Check with your accountant to ensure that taxes on any money that you plan to transfer are taken care of properly. Of course, everybody’s tax situation is a bit different, so consulting with an expert is the way to go.
2. Start The Transfer
Now, it’s time to transfer your money.
You can go to your old brokerage and download a transfer form. Before you fill out the form, make sure you have the relevant information. You’ll need to find your new account number and other necessary account information.
3. Pick Investments
Some investment plans are expensive, but they don’t have to be. It’s always safer and cheaper to invest in index funds if you can.
If your new account is an IRA, you’ll have a bigger say in where your money goes. You’ll be able to purchase funds, individual securities, and more.
But, sometimes, if the fees are high it might be work it to stick with a managed approach, especially if your job offers a percentage match. These matches could outweigh any management fee a more expensive plan may have.
4. Keep Saving
Your retirement fund will hopefully give you some great returns. However, the returns will be magnified if you continue to invest money into your portfolio. Many employers allow their employees to put a certain percentage of their paychecks directly into their 401(k) or IRA.