Rolling over a 401k to an IRA

When you leave a job where you had a 401(k), you generally have several options.  You can cash out the retirement account, which means paying income tax and early withdrawal penalties. If you have over $5000 in the 401(k), you can leave your money in it, but you risk your former employer going out of business when you're not paying attention. You can roll it into your new employer's 401(k) or 403(b) plan, if one is available, but you might not like the options available or you might have to wait a while before you can get in; additionally, your old account might hold stocks that you'd like to keep. This brings us to the last option: rolling the money over into an IRA.

Put the money from your 401(k) into an account that contains only money that has been rolled over, not other money that you may have contributed. This gives you th option of rolling it back into another 401(k) in the future.

When rolling over your money, never let your 401(k) send you a check; the IRA will count this as a distribution and tax you accordingly. Always have the money sent directly to your new plan.

If you've decided to roll over your account, do it right!

1. Double check that there aren't any fees for rolling over your account. Also, make sure your former employer has notified the 401(k) provider knows that you are no longer employed, or the rollover won't go through. 
2. Get the forms; you'll need to fill out some paperwork.
3. See what the new provider requires; you may need to open the account first and then process the rollover, or rolling in money may be part of the account opening process.
4. Take your time and ensure that you filled out the form properly. In particular, be sure that you select "direct rollover" on the form from your previous employer, if it asks what type of distribution you're taking; this ensures they don't send the money to you.
5. Follow up; if you haven't received the money in your new account within a couple of weeks, contact the provider holding your old 401(k) and see if there's a problem. If the forms weren't filled out perfectly, they might just hold on to your money and wait for you to contact them.