Rolling into an IRA

When you retire you can move some or all of your 401(k) assets into an individual retirement account (IRA) of your choice. You can move all the money into one IRA, or divide the total value of your account into a number of IRAs with different beneficiaries.

If you authorize a direct transfer to your IRA, your assets remain tax deferred. Nothing is withheld to prepay taxes, and any future earnings are tax deferred as well. And you’ll probably be able to choose from among a wider range of investment options than the selection offered by your 401(k). That gives you greater control over the amount you pay in fees and over which assets you liquidate to provide income. You also have the freedom to decide whether to start withdrawing immediately or at some point in the future.

But you can’t borrow from an IRA, and you can’t postpone minimum required distributions if you continue working after 70½.

If you’re considering a rollover, you may want to ask these questions as part of choosing an IRA custodian:

1. Is there a broad range of investment options?
2. Is there a system in place to help you manage your required distributions if you choose to use it?
3. Once you begin to take income, will you be able to take more than the required minimum in some years?
4. Will the custodian accept your designation of beneficiary form if the standard one doesn’t allow you to make the arrangements you want?
5. If the custodian is a mutual fund company, what are their funds’ annual management fees? Do their funds charge a sales load, or are they no-load funds?
6. If the custodian is a brokerage firm, what is their commission structure? Have you checked out the firm’s background using FINRA’s BrokerCheck Web page?