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How to roll over a 401(k)
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November 24, 2000: 7:43 a.m. ET
Changing jobs? Roll that 401(k) into an IRA, buy mutual funds, stocks, bonds
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NEW YORK (CNNfn) - If you switch jobs and leave behind a nice amount of money in your 401(k), you may be eager to roll it over to an IRA. But what are the restrictions on such a move and what are your investment options?
In response to a reader's question, Heather Locus, a certified financial planner from Schaumburg, Ill., and a member of the Financial Planning Association, outlined the steps you should take.
Ask the experts a question
I just changed jobs for the first time since leaving college 16 years ago. I have several hundred thousand dollars in my company's 401(k) plan. I have been told that this is a great opportunity for me to get control of that money versus being limited to the investment funds offered by my former company. I know there is a time limit for this.
Could you explain what my options are and how I would use this money to invest in my own funds? Can I put this money in a trading account like Ameritrade and still invest it in both stocks and mutual funds?
Congratulations on the job change and for saving in your 401(k) so diligently!
Typically there is no time limit on how soon you must roll a 401(k) directly to an IRA. You may be thinking of the law that states if you withdraw the 401(k) and do not directly roll it to an IRA, you must redeposit the complete 401(k) balance within 60 days or it is a distribution, which is taxable and subject to a 10 percent as you are younger than 59-1/2.
Again, if you have the 401(k) trustee make the check payable to the new custodian for the benefit of your IRA, no taxes are withheld and it is not a taxable event.
You are absolutely correct that one of the main benefits of rolling the plan to an IRA is the investment flexibility. You can select any combination of mutual funds, individual stocks or bonds. You could go to Ameritrade or any other brokerage such as Schwab, Smith Barney or direct to a fund company such as Vanguard. You could invest in any investment option that custodian offered.
Or, given the large dollar amount in your plan and the vast number of investment options available, you can meet with a qualified adviser to assist you with your investment plan and provide guidance on retirement planning and any other applicable financial issues. Good luck! 
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