ShareBuilder is offering customers a $100 cash bonus if they transfer their account from a competing brokerage. This offer is available to new and current customers. Many account transfer offers are only available to new customers at the time of account opening, making this a more unique deal.

To qualify for the $100 ShareBuilder bonus you have to transfer your entire account balance to ShareBuilder from a competing brokerage (minimum of $500). You must provide a copy of your most recent brokerage account statement for ShareBuilder to verify you are transferring your entire account.

ShareBuilder $100 Account Transfer Bonus

1. Open a ShareBuilder account, or Log in to your current account.
2. Print and complete an Account Transfer Form (available from within your account, or when you open an account).
3. Activate your $100 bonus in an eligible account. Use Promotion code: TRADEUP100.
4. Mail or fax a signed transfer form and a copy of your most recent statement to ShareBuilder.

Here is the fine print:

† $100 Transfer in Bonus: ShareBuilder will deposit a $100 bonus into your account after completing a full brokerage transfer of $500 or more from a competing broker to ShareBuilder. The $100 bonus offer is available for Individual, Joint and Custodial accounts only. Offer not valid for IRA or Education Savings Accounts. The $100 bonus will post to your account approximately 4-6 weeks after completing a full brokerage transfer from a competing broker and is not available for withdrawal for 180 days. This offer is not valid with any other offers and is non-transferrable. Limit one ShareBuilder promotional award per unique customer or custodial beneficiary. ShareBuilder reserves the right to terminate this offer at any time and to refuse or recover any promotion award if ShareBuilder determines that it was obtained under wrongful or fraudulent circumstances, that inaccurate or incomplete information was provided in opening the account, or that any terms or ShareBuilder’s Account Agreement has been violated.

Is it worth it?

A one time $100 bonus is nice and there are other benefits to consolidating your financial accounts, including fewer logins, centralized management, and easier asset allocation. This offer is a good deal if you were already considering moving your assets out of your current brokerage. For more information regarding ShareBuilder and whether it meets your needs, check out this ShareBuilder Review or compare ShareBuilder to the best online brokerage houses.

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Right now savings account rates are relatively low, which leaves a lot of people looking for a better return on their money. While many people prefer leaving their money in a standard savings account, there are some options where you may be able to earn a little more interest. These tips are primarily for people who have an established emergency fund and are looking for a better return on investment for money they do not need immediately.

High yield money market accounts & high yield checking accounts

Many banks offer high yield savings accounts, high yield money market accounts, and high yield checking accounts, each of which may offer different interest rates or benefits. Be sure to check with your local bank or credit union, which may have better offers than you can find online – particularly for high yield checking accounts. Also be sure to read the fine print before opening an account because money market accounts and high yield checking accounts often have a list of requirements that must be met to achieve the highest interest rates. High yield checking accounts often have a long list of requirements, such as maintaining a minimum balance, completing a certain number of debit card transactions per month, a maximum deposit for the highest interest rate and more. In some cases they are more hassle than they are worth.

Certificates of Deposit (CDs)

Certificates of deposit are term deposits that customers deposit with a bank for a set period of time. The amount of money banks can lend is tied to their deposits, so having a customer deposit locked in allows banks to offer better interest rates than a standard savings account. Most banks will charge a penalty if you end your CD before it has matured, so be careful not to put your money in a CD if you think you will need it soon.

How to avoid breaking CDs. The two best ways to avoid breaking CDs are to build a CD ladder or use a no-penalty CD. CD Ladders stagger your CDs on a monthly or annual basis, giving you access to a portion of your funds with more frequency. No-penalty CDs allow you to withdraw your funds without incurring a penalty. These often come with shorter terms and potentially lower interest rates than other CDs, but often beat high yield savings account rates. You can find no-penalty CDs at Ally Bank.

Purchase Bonds

Bonds are essentially loans that you give to the government or a business in return for a promise of payment at a future date. not all bonds are guaranteed, so be sure to investigate the risks before investing. You can purchase guaranteed savings bonds from the US government which are exempt from state and local taxes. Many states, cities, counties, and towns issue Municipal Bonds to pay for public projects and other activities, such as building schools or repairing roads. The majority of municipal bonds are exempt from federal, state, and local taxes, which, depending on your tax bracket, can raise the effective yield above other types of bonds or above savings accounts.

Retirement contributions

If you have extra cash in your savings accounts, you can consider increasing your retirement contributions above what you are currently making. You can contribute up to $5,000 in a Roth or Traditional IRA, and you can contribute up to $16,500 to your 401k in 2009. One way to max out your 401k contributions this year is to increase your payroll withholding and make withdrawals from your savings account to make up for the difference in cash flow. Only do this if you have a buffer in savings and don’t forget to reset your contribution levels after you max out your 401k.

Peer to peer lending

Before reading further you should realize the P2P lending is not a guaranteed investment and is not backed by the FDIC. So if you are looking for a place to stash your short term reserves without risk, then this is not an option for you. But if you are looking at a short term investment with potential returns better than a standard savings account, then you may consider purchasing loans through Lending Club or Prosper, two of the leading P2P lending institutions. While these loans are not guaranteed, there is an opportunity to return much more than a standard savings account or other investments, with Lending Club loans recently returning an average of over 9%.

Pay off debt

If you have extra cash sitting around your savings account and want to get a better return than current interest rates, then consider making additional payments on any outstanding loans, including your mortgage. Chances are you will receive about a 5% return on investment or higher, which is much better than the sub 2% interest rates offered by most banks right now.

Where is the best place to stash your cash?

The best place to stash your cash depends entirely on your financial situation and risk tolerance. You should maintain your emergency fund and as much additional cash as you deem necessary. If you have extra cash after that then it doesn’t hurt to look for a better return on your investment.

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3. High Yield Savings Account Rates – Updated Oct. 2, 2009

If you are looking for a new online broker, then right now may be a good time to take a long look at OptionsHouse, one of the top rated online discount brokerage firms. OptionsHouse is currently running a special promotion good through the end of the year: 100 free stock trades when you open a new OptionsHouse account.

Why choose OptionsHouse?

OptionsHouse is one of the top online brokerage firms and was rated #1 in Trade Experience for Options Brokers by Barron’s (a Wall Street Journal company). Along with high ratings, OptionsHouse offers users a wide array of trading tools and educational experiences, along with free use of the Maxit tax-management tool to manage your gains and losses. Their $2.95 standard trades are among the lowest in the industry, and their $9.95 options trades are very competitive. On top of these features, OptionsHouse offers no maintenance fees, volume requirements, monthly minimums, or additional charges for broker assisted trades.

How does OptionsHouse compare to other brokerages? See how OptionsHouse compares to Scottrade and tradeMONSTER, or where they rank among the top online discount brokers. You can also read the OptionsHouse Brokerage Review for more in depth information.

How to get 100 Free stock trades from OptionsHouse

• Open a new OptionsHouse brokerage account with at least $3,000
• Use the following Promo Code when you sign up: FREE100
• Receive 100 free stock trades.
• Offer expires December 31, 2009.

You then have 60 days from the time you fund your account to use your commission-free trades. Free trades are eligible to be used on regular stock and options trades. You will not receive cash compensation for any unused free trade commissions.

Other current promotions at OptionsHouse:

• ACAT Transfer Fee Reimbursement. OptionsHouse will reimburse you up to $100 to trasnfer your funds from another brokerage.
• $25 wire fee reimbursement for initial account funding.
• Refer-a-friend bonus. Get your choice of $50 or 10 trades per referral

Overall, it looks like OptionsHouse is among the more competitive online discount brokerage firms and definitely deserves a look if you are considering a new brokerage firm. For more information or to open an OptionsHouse account, visit http://www.optionshouse.com/.

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In the world of online brokerages, cost is one of the first things many investors look at because if trades are too expensive, they will eat into your returns. If cost is a concern for you, then consider OptionsHouse, a discount brokerage that offers some of the least expensive commissions in the industry with a flat rate of $2.95 per trade, regardless of how many shares you purchase. They also offer $9.95 options trades regardless of how many contracts are executed. Not only are their trade commissions low, but they back it up with great features and strong industry reviews.

OptionsHouse Brokerage Review

There are many important features to an online brokerage account, so let’s take a look at some of the most important – cost per trade, fees and account requirements, and investment options (types of investments and types of accounts).

OptionsHouse Commissions. As we already mentioned, OptionsHouse charges some of the lowest commissions in the industry with $2.95 flat rate for stocks, regardless of how many shares are purchased or if it is a broker assisted trade. Option trades are a flat rate of $9.95 regardless of how many contracts are executed. Again, there is no charge for broker assisted trades.

Account fees and minimums. OptionsHouse does not charge account maintenance fees, inactivity fees, monthly minimums, or additional charges for broker assisted trades. All prices are a flat rate, regardless of volume (some brokerages, such as Zecco have differential pricing based on number of trades or account balance). Bottom line – what you see is what you pay.

Investment options. OptionsHouse offers investors the ability to purchase and sell equities, options on equities, ETFs, and mutual funds and they offer individual and corporate accounts, Roth, SEP, and Traditional IRAs, and accounts for trusts, partnerships, investment Clubs, Educational IRAs, and custodial accounts for uniform transfers to minors or gifts to minors act (UTMA or UGMA).

OptionsHouse tools and educational center

OptionsHouse specializes in the options market and offers a wide variety of beginner level and expert level options trading tutorials in the form of articles, tools, ebooks, and webinars. Tools include an options screener, strategy screener, various calculators, a virtual trading account, and free access to the Maxit tax-management tool. Here are more OptionsHouse tools:

OptionsHouse – Award winning brokerage firm

OptionsHouse earned a four-star rating in Barron’s 2008 Best Online Broker Survey and received the #1 ranking for “Usability.” In 2009 Barron’s gave OptionsHouse a 4.5 star overall rating and listed them as the “Best For Options Traders.” Barron’s also rated OptionsHouse #1 in Trade Experience in their 2009 Online Broker Survey.

Customizable award winning user interface. OptionsHouse gives users the ability to customize their trading screen to their personal preferences. An example of the OptionsHouse award winning user interface is below:

Current OptionsHouse promotions

OptionsHouse is currently offering new customers some nice incentives to open a brokerage account, including:

• 100 free trades through the end of the year.
• ACAT reimbursement to transfer your funds from another brokerage (up to $100).
• $25 wire fee reimbursement for initial account funding.
• $50 or 10 free trades for referring new customers.

For more information, or to open an OptionsHouse brokerage account, visit http://www.optionshouse.com/.

About OptionsHouse

OptionsHouse, LLC and is owned by PEAK6 Investments, L.P., and are headquartered in Chicago. They are a licensed FINRA broker-dealer, and are a member of SIPC, which backs customer accounts against the insolvency of a brokerage firm (but not against market loss).

Customer support. OptionsHouse offers telephone and web support before, during, and after trading hours, and there is no additional fee for broker assisted trades. You can reach OptionsHouse customer support at 1-877-653-2500 from 7am – 6pm Central. Visit http://www.optionshouse.com/ for more information.

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Individual Retirement Accounts (IRAs) are a great way to invest for retirement because they give you the opportunity to invest your money with tax advantages that are more beneficial than investing in a non-retirement account. You can open a Roth IRA at many financial institutions, which is convenient for investors. But each financial institution is not created equally and every investor has different needs, so it pays to do your research before jumping in with both feet. You should assess your investment style and needs before opening a Roth IRA or making any other investment.

What to look for when opening an IRA

Where you can open an IRA

Many financial institutions and brokerages offer IRAs, including banks, brokerage firms (Merrill Lynch, Edward Jones, etc.), online discount brokerages (Scottrade, E*Trade, TradeKing), mutual fund companies (Vanguard, Fidelity, T. Rowe Price), and independent certified financial planners. You will want to find the financial institution that best meets your investment needs.

If you prefer speaking with someone face to face, then you may wish to go with a full service broker that has an office where you can discuss your investment needs. If you prefer a more hands on approach you may wish to go with a mutual fund company where you can invest in a variety of mutual funds and other investments, or an online brokerage where you can make inexpensive individual stock trades. If you like a combination of these features, then consider a company like Scottrade, which offers a discount online brokerage, and also has individual branches where you can meet with a broker to discuss your investment needs.

Best places to open a Roth IRA. Here are some of the more popular places to open a Roth IRA.

Questions to ask before opening your IRA

• Is there a minimum initial investment to open an IRA?
• Are there minimum contributions?
• What types of fees are charged and how much are they?
• Can fees be avoided with minimum account balances or by receiving electronic statements?
• Does the company offer option to make automatic contributions?
• Which investment options are available? Stocks, Bonds, Mutual funds, ETFs, CDs, other?.

You should be able to get the answers to most of these questions online, unless you are opening an account with an independent financial planner, who may or may not have this information online. If the information is not readily available online, give the financial institution a call and ask for an information packet before opening an IRA. It’s a good idea to review the fees and other details prior to opening your IRA; that way you have a good idea of what kind of fees and other expenses you can expect to pay.

All things being equal, go with the company or broker you feel most comfortable with. And if you later decide that you don’t prefer the financial institution where you opened your IRA, you can always transfer it to another financial institution. The brokers there will be happy to help you fill out the paperwork.

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2. Where to Open a Roth IRA Account
3. Where Do You Get the Best Roth IRA Rates?

The online brokerage community has grown by leaps and bounds in the last few years, which is great for investors who like to participate in online stock trading. The competition has forced innovation, cheap online stock trades, and additional features such as educational and training centers, free webinars, chat rooms and forums, social networking, free tax software to track gains and losses, and more. Not all of these features are available at each online brokerage, and some stock brokers offer better value than others. This online discount brokerage comparison chart will give you some basic information on pricing structures, and below the comparison chart are some unique features about each of these online brokerage firms. Hopefully you can use this information to find the discount online brokerage that is best for your needs.

Best online discount brokerages

Discount Brokerage Features

Each of these brokers has some features that set it apart from the others.

Scottrade: Scottrade has 25 years of experience and one of the best reputations in the brokerage industry. The $7 trades are right in the middle of the price range out of these online brokers, but Scottrade is the only discount brokerage on this list featuring brick and mortar offices where you can visit a broker for face to face meetings. No maintenance or inactivity fees, low stock trades, free online workshops, the Scottrade community, research and educational tools and tax tracking software make Scottrade a great fit for day traders and the casual investor alike. Scottrade will reimburse new customers up to $100 to transfer their holdings to Scottrade. For more information, or to open a Scottrade account, visit http://www.scottrade.com/.

TradeKing: TradeKing is a personal favorite of mine. They have a slick and easy to use interface, cheap stock trades, an exceptional learning center, free webinars, free access to Maxit Tax Manager to track your gains and losses, and more. TradeKing’s pricing structure is among the best in the business for discount stock trades, including for investors who prefer to trade options. TradeKing also offers to reimburse new customers up to $150 to transfer their assets to TradeKing. For more information, or to open a TradeKing account, visit http://www.tradeking.com/.

E*Trade: E*Trade is offers a full-service brokerage firm and an online bank which makes it easy to link accounts and transfer funds to and from. E*Trade has won numerous awards for both their brokerage services and their online savings accounts. While their trades are not the cheapest of the listed brokerages, they offer a wide array of services and features not found with many other online discount brokerages. New customers can get 100 free trades when they open a new Power E*TRADE accounts and fund it with a $1,000 minimum deposit within 60 days. For more information, or to open an E*Trade account, visit https://us.etrade.com/e/t/home.

Zecco Trading: Zecco burst onto the scene a couple years ago with unlimited free stock trades. Though that business model didn’t last, you can still get up to 10 free trades per month at Zecco if you make a minimum of 25 trades per month, or maintain a minimum account balance of $25,000. Zecco also features an online community, educational services, and premium services. For more information, or to open a Zecco Trading account, visit http://www.zecco.com/.

tradeMONSTER. tradeMONSTER is one of the newer online brokerages, but they have won several awards since their launch in 2008. One of tradeMONSTER’s more prominent features is their award winning user interface which allows the user to customize it to his specific tastes. tradeMONSTER features streaming stock prices with no additional charges or trading minimums, which is a rare feature among discount brokerage firms. The streaming information is a nice touch that removes the need to continually refresh the page for current prices, news and trends. For more information, or to open a tradeMONSTER account, visit https://www.trademonster.com/.

OptionsHouse. Options House offers the lowest prices for a standard online stock trade out of the brokerages listed in this review. A standard stock trade only costs $2.95 and options trades are a flat rate of $9.95. OptionsHouse was rated #1 by Barron’s in user experience. This is a great brokerage for investors who are concerned with cost per trade.  While options traders may be able to find a lower average cost based on their trading habits, OptionsHouse scores points for their user interface, software, and other features, making them a solid option for investors of all types. OptionsHouse boasts no maintenance fees, volume requirements, monthly minimums, or additional charges for broker assisted trades. For more information or to open an account, visit: http://www.optionshouse.com/

ShareBuilder. Buy and hold is the mantra of many investors, and that is the business model employed by ShareBuilder. Trade prices range from as low as $1 if made with an automatic purchase plan, up to $14.95 for real time trades. Most investors will fall in the middle of this price range, with all customers being eligible for automatic trades as low as $4 each without any additional fees, minimum trade requirements, or account minimums, making ShareBuilder an ideal brokerage for methodical discount trading. ShareBuilder offers an educational and training center and a variety of premium features. ShareBuilder is owned by the same company that owns ING Direct, which makes it easy to link accounts. For more information, or to open a ShareBuilder account, visit http://www.sharebuilder.com/.

OptionsXpress. OptionsXpress has a variable pricing schedule which drops when you makes 10 trades in a quarter. OptionsXpress has no inactivity or maintenance fees regardless of how much you have in your account, and does not charge for streaming quotes or standard withdrawals. OptiosnXpress offers free webinars, free trading tools, free advanced research and the option of a personal coaching program. You can also get up to $100 when you transfer your stock broker account to OptionsXpress. For more information, or to open an OptionsXpress account, visit http://www.optionsxpress.com/.

Which discount brokerage is the best?

As you can see by this comparison chart, there is a wide range of prices and features with these brokerages, which should cover just about anyone. I recommend reading about how to evaluate online brokers and visiting these sites to determine which online discount brokerage is the best for your needs.

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A frequent question I get asked is where to find the Roth IRA with the best interest rates. I applaud anyone seeking to improve his investment returns. Unfortunately, this is a question without a specific answer because a Roth IRA by itself isn’t a fixed rate investment; it is an investment account that can contain multiple types of investments with varying rates of return and amounts of risk.

A Roth IRA is an investment vehicle, not an investment

The first thing we need to do is understand what an IRA is and is not. According to the IRS, an IRA is an Individual Retirement Arrangement or an Individual Retirement Account, depending on how the term is used. The key word here is “Individual.” The person who owns the IRA determines how the assets are invested.

Roth IRAs  are a trust or custodial account designed for special tax benefits. But a Roth IRA by itself is not an investment – it is an account designed to hold investments. The Roth IRA itself is just a piece of paper designating you as the account owner and beneficiary. The trustee or custodian maintains the document and record keeping on your behalf, and works to ensure you maintain certain requirements. From there it is up to you to determine how to allocate your assets as part of your long term retirement plans. If this is not a strong point for you, then consider working with a professional financial advisor to assist you.

Where do you get the best Roth IRAs?

As we mentioned, a Roth IRA is just a vessel for your retirement investments. You can open a Roth IRA with a trustee or custodian at a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian.

How to open an Roth IRA.

Opening a Roth IRA is an easy process. Once you ensure you meet eligibility criteria, you will need to select a custodian, fill out some paperwork, select which funds you wish to invest in, and fund your IRA.

Best places to open a Roth IRA.

The best place to open an IRA depends on your investment needs. A professional financial planner may be able to open a Roth IRA in your name. You can also open a Roth IRA with many banks and credit unions, as well as a variety of mutual fund houses and brokerage firms. You should make your decision based on your investment needs and style.

If you need assistance with your investments, then a professional advisor or broker may be the best option for you. If you are a hands on investor, then you may wish to take a look at the best brokerages for Roth IRAs, some of which include Scottrade, E*Trade, and Zecco.

Where are the best Roth IRA rates?

Because Roth IRAs are individual accounts and you can invest in virtually anything, you will need to search out the best investment that meets your needs and risk tolerance. If you are looking for a guaranteed interest rate, then consider a Certificate of Deposit (CD) or government bonds. If you are willing to assume more risk and potential reward, then you may be better investing in equities, REITs, or other investments. Roth IRAs can hold almost any type of investment, therefore the rate you receive is subject to the type of investments you use in your Roth IRA.

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The IRS recently released the 2010 Traditional and Roth IRA contribution limits, which will come in handy for those of you who like to start planning early. As expected, the 2010 Traditional and Roth IRA contribution limits remain the same as the 2009 Traditional and Roth IRA Contribution Limits. That is good information to have as it gives people time to start their financial planning for 2010.

2010 Traditional and Roth IRA Contribution Limits

The Traditional and Roth IRA contribution limits for 2010 are $5,000 for those under age 50. Persons age 50 and over can make additional catch up contributions of $1,000, for a total contribution limit of $6,000. You can have both a Roth IRA and a Traditional IRA in the same tax year, but you can’t exceed the contribution limit with your combined contributions to both accounts. Self-employed retirement plans may have different rules, so be sure to read up on the different self-employment tax plans or check with your accountant or financial advisor.

2010 IRA Contribution Limits

Traditional IRA Deductions and Roth IRA Phase outs

The IRS has specific rules regarding who can contribute to an IRA. Traditional IRAs and Roth IRAs base certain eligibility guidelines on the taxpayer’s Modified Adjusted Gross Income (MAGI), which is calculated when you file your taxes.

Traditional IRA Deductions.

Traditional IRA contributions are tax deductible if you make less than the IRS deductibility phase out level. Tax filers can deduct a lower portion of their Traditional IRA contribution starting at $55,000 and can no longer deduct any of their contribution when they earn $65,000 or more. The phase out range for married filing jointly is between $89,000 and $109,000.

Roth IRA phase out.

Like the Traditional IRA, the IRS has phase out rules for Roth IRAs. Tax filers will be able to contribute less to their Roth IRA when they have a MAGI above $105,000, or above $167,000 for married filing jointly (up $1,000 from last year). Single filers with a MAGI above $120,000 and married filing jointly with a MAGI above $176,000 are not eligible for Roth IRA contributions.

Making 2010 IRA contributions

You can still contribute to your 2009 IRA until April 15, 2010, and you  can make IRA contributions for the 2010 tax year from January 2, 2010 and April 15, 2011. If you make an IRA contribution between January 2 and April 15th you should designate which tax year your contributions are for.

Here is more information about opening a Roth IRA account and the best places to open a Roth IRA.

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When you change jobs you need to decide what to do with your 401k plan. There are 3 basic options: (1) cash it out, (2) leave your funds in your old 401k plan, (3) roll it over into an IRA or other tax deferred plan. Rolling your 401k into an IRA is often the best option as it allows to keep your investments in a tax deferred plan, avoid taxes and early withdrawal penalties, and give you total control over where and how you invest your money, the fees you pay, etc.

How to Rollover a 401k plan into an IRA

We’re assuming you chose option #3 from the above options. Doing a 401k rollover into an IRA is easy, and is basically a three step process: (1) open an IRA, (2) transfer your funds into an IRA via a trustee-to-trustee transfer or an indirect rollover, (3) allocate your funds. The second step is the most important because it can have an affect on your taxes.

Note: These steps are similar for transferring 401(k), 403(b), Thrift Savings Plan and similar tax deferred retirement plans.

Opening an IRA

The first step is opening an IRA, which only takes a few minutes. All you need to do is open an account with the financial institution if you don’t already have one, sign a form, transfer some funds, then allocate them. For more information regarding what to look for when opening an IRA, I recommend reading the article How to open an IRA, and following that up with Where to open an IRA for some great investment houses and brokerages.

Roll over your 401k assets into an IRA

There are two primary 401k rollover options to transfer your assets into an IRA – by a direct or indirect transfer. You can also transfer your money into a conduit IRA, which is a Traditional IRA set up to hold your old 401(k) assets until you move the money into another qualified retirement plan.

Indirect IRA rollover

With an indirect IRA rollover, you receive a check for the amount of your 401k plan assets, minus an automatic 20% tax withholding. You then have up to 60 days to deposit the entire amount that was in your former plan into a tax deferred retirement account. Otherwise the amount you don’t deposit will be treated as a withdrawal for tax purposes, and may be subject to income taxes and early withdrawal penalties. That means you need to come up with 20% out of pocket to make up for the amount that was automatically withheld. You will receive a tax refund for the 20% when you file your taxes the following year, but you are on the hook in the meantime. Thankfully, there is an easier way to rollover your 401k, which avoids any deductions or tax withholdings.

Trustee-to-Trustee Transfer of a 401k plan

A trustee-to-trustee transfer, or direct transfer, moves your 401k plan assets to another qualified retirement plan without having to worry about cashing it out and having to pay taxes or early withdrawal penalties. This way you can safely and easily transfer the funds in your account and not worry about coming up with 20%, forgetting to deposit the assets, or making any other mistakes along the way. The paperwork is easy to fill out, and most banks brokerages, or investment houses will be happy to do the paperwork for you. Once the paperwork is filled out, your new brokerage will initiate the funds transfer from your old brokerage and the transfer is made.

Allocate your funds

Most brokerages will allow you to elect which funds you wish to invest in before you transfer your funds from your former 401k plan trustee to your IRA custodian. However, some IRA custodians may just place the money in a money market account or high yield savings account until the transfer has been completed; then you need to allocate the funds according to your risk tolerance and investment needs.

Things to look out for when Rolling a 401k into an IRA

• Rollover contributions do not count toward annual IRA contribution limits. You can still contribute up to the maximum amount allowed based on your age and income.
• Most Roth 401k plans will automatically roll over into a Roth IRA, and a Traditional 401k plan will roll into a Traditional IRA. You can transfer a traditional IRA into a Roth 401k, but you will need to pay taxes and meet certain income qualifications. Consult with your broker or a financial planner for more details.
• All 401k plans must allow you to transfer your funds via a trustee-to-trustee transfer.
• Verify transfer eligibility, fees, and/or tax considerations before transferring your 401k plan.
• You may wish to contact a financial planner if you have company stock in an old 401(k) plan.
• When in doubt, consult with your broker or a certified financial planner before making any financial decisions.

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Related Articles:

1. Should You Rollover a 401k into an IRA?
2. Deciding What to Do With Your 401(k) When You Change Jobs
3. Tips for Managing Your 401k Plan

Changing jobs is always a busy time. You need to tie up loose ends at your old job, learn the ropes at your new position, maintain your professional network, and a host of other activities. One thing you shouldn’t stress about is deciding what to do with your 401k plan. Basically, it boils down to 3 primary options: (1) cash it out, (2) leave your funds in your old 401k plan if able, (3) roll it over into an IRA or other tax deferred plan.

The first option is rarely a good idea as you will have to pay taxes and possibly early withdrawal penalties. The second option can be a decent idea if you are happy with your old plan and your former company allows you to maintain your assets in their 401k plan.

Finally, the third option allows you to keep your investments in a tax deferred plan and avoid taxes and early withdrawal penalties. You can transfer your old 401k plan into a new 401k plan at your new company, move it into an annuity, or you can roll your 401k plan assets into an IRA. Rolling your 401k into an IRA is often the best option as it allows you total control over where you invest your money, the fees you will pay, etc. Let’s take a look at your options.

Should you rollover a 401k into an IRA?

We are going to make the assumption that you won’t cash out your plan, which leaves us with the choices of rolling your 401k into an IRA, leaving it with your former employer, or rolling it into your new 401k plan. Because your assets stay in a tax deferred retirement plan, the tax rules are essentially the same for all three choices. The main differences boil down to the rules and investment choices of the plan you choose.

Rolling over your 401k into an IRA

Rolling your 401k into an IRA is usually the best option because you have total control over how and where your money is invested.

Advantages

• Total investment flexibility; you decide where and how to invest.
• Account consolidation (easier to maintain record keeping and balance assets).
• Option of moving your assets to a future employer’s plan.

Disadvantages

• You can’t borrow from your assets.
• Some investment options in a 401(k), such as company stock purchasing plans, may not be available in an IRA.

Related information: Here are tips on how to open an IRA and best brokerages for IRAs.

Leave assets in former employer-sponsored plan

This is usually the easiest option because it takes no effort on your part. Simply pack your bags and move on to your next place of employment. But just because it is easy doesn’t always mean it is the best decision.

Advantages

• You may have investment options in the plan that are not available to you outside the plan.

Disadvantages

• Limited investment choices.
• Most likely cannot make future contributions.
• Usually need assets totaling $5,000 or more to remain in former employer’s plan.
• May have to cover a portion of the expenses.

Transfer to your new employer-sponsored plan

Most employer sponsored plans will give you the option of transferring your assets from your former employer sponsored plan when you enroll. You only have to fill out a form and the plan administrators will take care of the rest.

Advantages

• Account consolidation (easier to maintain record keeping and balance assets).
• Ability to borrow from your 401k.

Disadvantages

• Limited investment choices.
• May have to wait before you are eligible for the plan at your new company.

Keep retirement funds in a tax deferred retirement plan!

Whichever option you choose, try to keep your retirement funds in a retirement plan. Cashing out early will subject you to instant tax obligations and early withdrawal fees if you are under the minimnum withdrawal age. The taxes and fees can easily destroy more than a third of your hard earned investments. In addition to taxes and fees, you will set yourself back in your retirement planning. Unless it is an emergency, leave it alone!

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Related Articles:

1. How to Rollover a 401k Plan into an IRA
2. Deciding What to Do With Your 401(k) When You Change Jobs
3. Leave Your Money in Your Retirement Accounts!