# How to change a 401k into an IRA? **URL:** \ **Category:** Factual Questions\ **Created:** [May 8, 2015, 12:16am UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526 "2015-05-08T00:16:33Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![LynnM](https://avatars.discourse-cdn.com/v4/letter/l/b2d939/32.png) [@LynnM](https://boards.straightdope.com/u/LynnM)\ **Post date:** [May 8, 2015, 12:16am UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/1 "2015-05-08T00:16:33Z")
I quit a job a few years ago and let my 401k plan remain with that now-former employer. The 401k is with Fidelity. I’ve been entirely passive with this 401k–I’ve never bought/sold/transferred, nor opened additional accounts, such as a money market account. My Q: How exactly do I sell/redeem/liquidate all the mutual funds in this 401k, and then put the cash into…is it called a “rollover IRA”? I’ll probably want to put the cash into a credit-union rollover IRA acct, if that’s the correct term. When I tell Fidelity to liquidate, should I first create a money-market acct in the 401k, into which Fidelity puts the mutual-fund sale cash? And then transfer that cash to my rollover IRA? Would it be best to set up an online acct w/Fidelity and do this myself instead of via phone? Thanks for info–please correct any misconceptions/misinformation I have about this… ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [May 8, 2015, 12:20am UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/2 "2015-05-08T00:20:35Z")
I recommend going to the credit union. Tell them that you want to rollover a 401(k) to an IRA with them. They will help you with the paperwork and arrange to transfer the money from Fidelity directly to them. A direct transfer like that is better than if you take the money and move it to an IRA. ---
**Author:** ![Snnipe\_70E](https://avatars.discourse-cdn.com/v4/letter/s/b5a626/32.png) [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)\ **Post date:** [May 8, 2015, 12:25am UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/3 "2015-05-08T00:25:23Z")
My son has just started in the business. His recommendation would be set it up in a 7702 plan. Check with a life insurance agency. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [May 8, 2015, 12:35am UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/4 "2015-05-08T00:35:23Z")
Why would the OP want to pay for an insurance contract (which is, I believe, what a 7702 plan is) when she can simply move the money to a rollover IRA? I’ll bet that the insurance contract will involve a fat commission. ---
**Author:** ![zombywoof](https://avatars.discourse-cdn.com/v4/letter/z/9e8a1a/32.png) [@zombywoof](https://boards.straightdope.com/u/zombywoof)\ **Post date:** [May 8, 2015, 12:37am UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/5 "2015-05-08T00:37:43Z")
I agree with Dewey Finn - if you’re unsure how to do it yourself the easiest thing is to talk to the Credit Union (or whoever you are setting up your new IRA with) and they will almost certainly be able to hold your hand through the rollover process - setting up the paperwork which will be sent to your old 401k provider, etc. ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [May 8, 2015, 12:57am UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/6 "2015-05-08T00:57:05Z")
Create an online account at Fidelity using your account number to register. It’s about a 5 minute process to then roll it over to a Fidelity IRA. Do a direct Rollover. To be quite honest, there is legitimately virtually no reason to utilize an IRA from anyone other than Fidelity or Vanguard. I lean towards Vanguard just slightly in terms of favorability, but since your money is already at Fidelity I think that tilts it to them. Credit unions are a great alternative to banking, but a damn poor alternative to the big institutional IRA providers like Fidelity and Vanguard (and to a lesser degree players like Schwab, Mellon, etc.) Credit unions which are usually much more affordable for banking services don’t tend to have the resource to offer a good IRA product, usually they have much higher account fees than Fidelity or Vanguard (both of whom you can actually essentially get an IRA for free from because they expect to make management fees off of you putting your money into Fidelity or Vanguard Mutual Funds–which honestly you should, the Fidelity Spartan and Vanguard mutual funds are among the cheapest in the industry.) Usually a credit union IRA has a much higher account maintenance fee than Fidelity or Vanguard and has a poor selection of mutual funds into which to invest, and typically charge a much higher commission for buying individual stocks. This isn’t out of any ill will from credit unions, it’s just that they don’t have the resources to do this stuff so when they offer investment services it’s always as a “pass through” entity. The financial firm that actually does the work charges a pretty penny, and thus the credit union has to pass that cost on to you. Fidelity and Vanguard have massive scale and operate a lot of low expense ratio funds to the point they don’t have to nickel and dime you over account fees and commissions. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [May 8, 2015, 12:57am UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/7 "2015-05-08T00:57:33Z")
If you don’t have or want to use a credit union, Vanguard makes IRA rollovers very easy. 7702 plans are garbage. Sorry, **Snnipe** ’s son. ---
**Author:** ![thelurkinghorror](https://avatars.discourse-cdn.com/v4/letter/t/7c8e57/32.png) [@thelurkinghorror](https://boards.straightdope.com/u/thelurkinghorror)\ **Post date:** [May 8, 2015, 12:58am UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/8 "2015-05-08T00:58:17Z")
Assuming you don’t have a Roth 401k (doubt you do), either: 1. Request that they deposit into a new traditional IRA. 2. Take out the cash, then manually deposit into a traditional. Not recommended - \*\*serious \*\*tax implications if you forget, and mandatory withholding. Not much of an issue if you are old enough, but sounds like you aren’t. 3. Put it in a Roth IRA. This requires extra steps to convert it. ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [May 8, 2015, 1:02am UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/9 "2015-05-08T01:02:53Z")
> [@Snnipe\_70E](#): > > My son has just started in the business. His recommendation would be set it up in a 7702 plan. Check with a life insurance agency. They’re great for the people selling them. ---
**Author:** ![Snnipe\_70E](https://avatars.discourse-cdn.com/v4/letter/s/b5a626/32.png) [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)\ **Post date:** [May 8, 2015, 2:23am UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/10 "2015-05-08T02:23:39Z")
> [@Dewey\_Finn](#): > > Why would the OP want to pay for an insurance contract (which is, I believe, what a 7702 plan is) when she can simply move the money to a rollover IRA? I’ll bet that the insurance contract will involve a fat commission. My knowledge on 7702 is very limited. But I look at one when I was retiring. Over time the policy gains value. In my case was should I have survivor benefit or get insurance. I figured if my wife out lived me by 20 years her benefit would be around a half mill. I could pick up life insurance policies that over time would pay out my wife her survivor benefit. When we are both dead the retirement checks stops. With a 7702 my kids would get what was left. The premiums were about the same as what it would cost to leave my wife a survivor’s benefit with my retirement plan. The only catch I could not pass the medical. It is worth checking is all I am saying. ---
**Author:** ![psychobunny](https://avatars.discourse-cdn.com/v4/letter/p/54ee81/32.png) [@psychobunny](https://boards.straightdope.com/u/psychobunny)\ **Post date:** [May 8, 2015, 2:44am UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/11 "2015-05-08T02:44:45Z")
For the OP: It is very simple. I have done it more than once. First-don’t sell anything or convert anything into cash or a money market. -Decide where you want your IRA to be. (I have one with a broker, one at Vanguard and on at Schwab). I second Fidelity or Vanguard or a discount broker if you want more choices. This place wants your money and will help you. -Call the place where you want the IRA to be (I find it easier to deal with an actual person on the telephone if you are at all concerned about anything). -Tell them you want a direct rollover. This will avoid any tax problems. If you liquidate the 401K then you have to make sure you deposit the money within 60 days or face tax penalties. If it is transferred directly from one institution to another nothing is reported to the IRS. -The receiving institution will be happy to have your money and will transfer all the holdings (stocks, funds etc) to your new account. They will take care of everything although you may have to sign some form authorizing the transfer. -If you have a regular 401K, transfer to a regular IRA and if you have a Roth 401K transfer to a Roth IRA. -Once everything is transferred, then take stock 😛 of your holdings and decide if you want to buy or sell anything, or convert anything to cash (or convert a regular IRA to a Roth)-but remember that you can keep your current investments if you are happy with them. -Remember that these companies really want your money and are eager to help you. They will do all the work for you. -Profit! ---
**Author:** ![LynnM](https://avatars.discourse-cdn.com/v4/letter/l/b2d939/32.png) [@LynnM](https://boards.straightdope.com/u/LynnM)\ **Post date:** [May 8, 2015, 1:29pm UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/12 "2015-05-08T13:29:42Z")
Thanks for replies–I might be getting it, but bear with me–I tend to get confused about IRA, Roth IRA, self-managed IRA, self-directed IRA, rollover IRA, rollover Roth IRA, 401k, and a new one for me: Roth 401k. To recap–I want to do two things: **1** –Because I’m uncomfortable with stock-market valuations, I want to sell the stock mutual funds in this 401k and have cash instead of stock mutual funds. I can do this with **no tax consequences** , correct? That is, a person can buy/sell funds within a 401k or IRA with no tax consequences? **2** –Change/convert this 401k into a “rollover IRA.” This would eliminate the 401k management/admin firm used by my previous employer. After the 401k/IRA rollover, they would have nothing to do with me. Am I correct in both of the above? **Or do I have the order reversed** –that is, should I \*\*first \*\* rollover the 401k into IRA, and **then** sell the funds and have cash? Key thing–I had not considered this possibility: I can do the above **while still remaining with Fidelity** –right? That is, \*\*where \*\* I put the rollover IRA is a separate issue. So, per **Martin Hyde** and **psychobunny** posts, I can do all this while **remaining at Fidelity** –dump the 401k and its management, rollover this 401k into an IRA at Fidelity. This way I’d be dealing \*\*only \*\* w/Fidelity. So might this be best? **1** –Do \*\*not \*\* buy/sell anything in 401k–instead, **do the rollover first at Fidelity**. So all my holdings remain the same; but they would now be in my IRA. I’d then have no 401k, thus never again any contact/dealings with the previous 401k manager. **2** –Now that all my holdings are in IRA, \*\*then \*\* sell the funds and put resulting cash into Fidelity money-market fund in the IRA. Is this right? ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [May 8, 2015, 1:48pm UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/13 "2015-05-08T13:48:17Z")
Yes, you can do what you want; move to a rollover IRA either at Fidelity or elsewhere and sell the mutual funds. But I don’t think it’s a good idea to get out of the market entirely. Yes, it’s really high now. Some valuations (particularly some of the technology companies) are crazy. But after the inevitable correction/downturn, the market will recover. I’ve got some money in money-market funds and the interest rates aren’t even enough to keep pace with inflation. ---
**Author:** ![Mainer](https://avatars.discourse-cdn.com/v4/letter/m/96bed5/32.png) [@Mainer](https://boards.straightdope.com/u/Mainer)\ **Post date:** [May 8, 2015, 2:12pm UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/14 "2015-05-08T14:12:43Z")
> [@LynnM](#): > > Thanks for replies–I might be getting it, but bear with me–I tend to get confused > about IRA, Roth IRA, self-managed IRA, self-directed IRA, rollover IRA, rollover Roth IRA, 401k, and a new one for me: Roth 401k. > > To recap–I want to do two things: > > **1** –Because I’m uncomfortable with stock-market valuations, I want to sell the stock mutual funds in this 401k and have cash instead of stock mutual funds. I can do this with **no tax consequences** , correct? That is, a person can buy/sell funds within a 401k or IRA with no tax consequences? Yes, as long as you stay within the umbrella of the 401k or IRA. > > **2** –Change/convert this 401k into a “rollover IRA.” This would eliminate the 401k management/admin firm used by my previous employer. After the 401k/IRA rollover, they would have nothing to do with me. Correct, convert or rollover. > > Am I correct in both of the above? Yes. > > **Or do I have the order reversed** –that is, should I \*\*first \*\* rollover the 401k into IRA, and **then** sell the funds and have cash? You can roll the proceeds right into a Money Market account under the Rollover IRA. Then leave it there or purchase stocks/bonds/mutual funds as you see fit. > > Key thing–I had not considered this possibility: > > I can do the above **while still remaining with Fidelity** –right? That is, \*\*where \*\* I put the rollover IRA is a separate issue. Yes. Fidelity will love to keep you as a customer. Vanguard and the others listed would like to see you as well and make the transfer as easy as possible. > > So, per **Martin Hyde** and **psychobunny** posts, I can do all this while **remaining at Fidelity** –dump the 401k and its management, rollover this 401k into an IRA at Fidelity. This way I’d be dealing \*\*only \*\* w/Fidelity. > > So might this be best? > > **1** –Do \*\*not \*\* buy/sell anything in 401k–instead, **do the rollover first at Fidelity**. So all my holdings remain the same; but they would now be in my IRA. I’d then have no 401k, thus never again any contact/dealings with the previous 401k manager.Some funds or holdings are not available to individual investors, but they will tell you this > > **2** –Now that all my holdings are in IRA, \*\*then \*\* sell the funds and put resulting cash into Fidelity money-market fund in the IRA.You can roll the proceeds right into a Money Market fund in the Rollover > > Is this right? My answers in red. Whichever company you use, I would suggest setting the Rollover IRA as a Brokerage Account. This will give you the flexibility to go outside your companies offerings of mutual funds. It will also allow you to purchase individual stocks if you change your investment scheme. ---
**Author:** ![Dag\_Otto](https://avatars.discourse-cdn.com/v4/letter/d/439d5e/32.png) [@Dag\_Otto](https://boards.straightdope.com/u/Dag_Otto)\ **Post date:** [May 8, 2015, 2:28pm UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/15 "2015-05-08T14:28:40Z")
> [@Dewey\_Finn](#): > > Yes, you can do what you want; move to a rollover IRA either at Fidelity or elsewhere and sell the mutual funds. But I don’t think it’s a good idea to get out of the market entirely. Yes, it’s really high now. Some valuations (particularly some of the technology companies) are crazy. But after the inevitable correction/downturn, the market will recover. I’ve got some money in money-market funds and the interest rates aren’t even enough to keep pace with inflation. I tend to agree, but the OP needs to consider a lot of things: age, whether or not they are still working, if they have any other retirement assets, if they are covered by a pension, are they eligible for social security, if they have a spouse, and so on. Since the OP doesn’t have much knowledge about investments and terminology, I suggest they go to the Boglehead forums and read and ask questions there. Great place to learn. My only other suggestion to the OP is that there is no need to rush any of this. Unless you have such a small balance in the 401k that your former employer is requiring you to transfer the funds, you can keep it there for a long time. It’s probably better to transfer to an IRA, but don’t rush it if you are not sure what to do. Take the time to learn. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [May 8, 2015, 2:47pm UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/16 "2015-05-08T14:47:44Z")
Even if you’re 65, you’re probably going to live another ten or twenty years. So you’ll still want to have some funds in the stock market even then. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [May 8, 2015, 3:09pm UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/17 "2015-05-08T15:09:29Z")
OP should note that having any pre-tax funds in an IRA can complicate a backdoor Roth IRA maneuver, if that might ever be under consideration. I have an old 403b with Fidelity, and I’m pretty sure they offer a variety of investment options, not all of which are securities. But perhaps they set up different options with different employers. It only has a few thousand in it, so I haven’t really paid it much attention. ---
**Author:** ![dracoi](https://avatars.discourse-cdn.com/v4/letter/d/90db22/32.png) [@dracoi](https://boards.straightdope.com/u/dracoi)\ **Post date:** [May 8, 2015, 4:33pm UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/18 "2015-05-08T16:33:18Z")
I would honestly suggest talking to someone at Fidelity. Part of what they do is the whole investment/retirement advising schtick. I don’t really have any preference for or against Fidelity compared to other companies, it’s just that I think people really need an expert that they communicate well with to explore their options. Another bit of advice: make sure the IRA custodian offers a range of investments. Some banks and credit unions offer IRAs that can only hold CDs from the bank. More and more, they’re partnering with brokerages to have better offerings, but you do have to be careful. Same proviso about the “7702 plan” - even ignoring the fees of the insurance policy, it’s a single type of investment. Never put all your money into a single type of investment. I don’t care how good it is… and cash value life insurance is not that good. They got a big boost because, for the 2000-2010 period, they actually had better returns than the stock market, but that’s because it was a lousy period for the stock market. When their claim is “We’re better 10% of the time!” you should really be asking about the other 90%. ---
**Author:** ![Jonathan\_Chance](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jonathan_chance/32/701_2.png) [@Jonathan\_Chance](https://boards.straightdope.com/u/Jonathan_Chance)\ **Post date:** [May 8, 2015, 5:24pm UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/19 "2015-05-08T17:24:19Z")
Disclaimer: I am a broker but I am not yours. I manage both 401ks for employers and IRAs for individuals. This isn’t investment advice but general information. > [@LynnM](#): > > Thanks for replies–I might be getting it, but bear with me–I tend to get confused > about IRA, Roth IRA, self-managed IRA, self-directed IRA, rollover IRA, rollover Roth IRA, 401k, and a new one for me: Roth 401k. > > To recap–I want to do two things: > > **1** –Because I’m uncomfortable with stock-market valuations, I want to sell the stock mutual funds in this 401k and have cash instead of stock mutual funds. I can do this with **no tax consequences** , correct? That is, a person can buy/sell funds within a 401k or IRA with no tax consequences? > > **Yes. There are only penalties when you take it out prior to 59 1/2. After that age there will only be taxation issues.** > > **2** –Change/convert this 401k into a “rollover IRA.” This would eliminate the 401k management/admin firm used by my previous employer. After the 401k/IRA rollover, they would have nothing to do with me. > \*\* > Correct. However, almost all mutual funds or other money managers charge a management fee, even if they’re place you into the funds themselves at no or little fee. Check the fine print.\*\* > > Am I correct in both of the above? > > **Or do I have the order reversed** –that is, should I \*\*first \*\* rollover the 401k into IRA, and **then** sell the funds and have cash? > > **It doesn’t matter. Though it often occurs that some mutual funds or other investments are only capable of being held at a specific firm. So to transfer they may be liquidated and the cash value sent instead.** > > Key thing–I had not considered this possibility: > > I can do the above **while still remaining with Fidelity** –right? That is, \*\*where \*\* I put the rollover IRA is a separate issue. > > **Yes. That should be do-able unless there’s something wonky in your 401k.** > > So, per **Martin Hyde** and **psychobunny** posts, I can do all this while **remaining at Fidelity** –dump the 401k and its management, rollover this 401k into an IRA at Fidelity. This way I’d be dealing \*\*only \*\* w/Fidelity. > > **Correct. But there will still be some management fees almost certainly.** > > So might this be best? > > **Possibly. Honestly, there can be several moving parts and giving accurate advice over a message board is generally impossible. Call Fidelity and tell them to send you the paperwork on both the 401k and the option to transfer it (it’s not technically a rollover) to an IRA. Also, find some large firm and consult a broker there. Any good one should be willing to give you a half-hour or so at no charge (if they try to charge you they’re not good and you shouldn’t go) and give you an honest opinion. Yes, they’ll undoubtedly want you to switch it to them but they’re required to give you a full write up of fees and costs and you can compare to Fidelity directly instead of working around the edges.** > > **1** –Do \*\*not \*\* buy/sell anything in 401k–instead, **do the rollover first at Fidelity**. So all my holdings remain the same; but they would now be in my IRA. I’d then have no 401k, thus never again any contact/dealings with the previous 401k manager. > > **2** –Now that all my holdings are in IRA, \*\*then \*\* sell the funds and put resulting cash into Fidelity money-market fund in the IRA. > > Is this right? > > **Correct, in an IRA you can buy/sell and so forth. However, one attribute that an IRA doesn’t have that most (not all) 401ks have is that in an IRA you can’t borrow against your savings - for a house or whatnot - while in a 410k you usually can.** As always, read the fine print and make your choices carefully. ---
**Author:** ![Tired\_and\_Cranky](https://avatars.discourse-cdn.com/v4/letter/t/a87d85/32.png) [@Tired\_and\_Cranky](https://boards.straightdope.com/u/Tired_and_Cranky)\ **Post date:** [May 8, 2015, 5:24pm UTC](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526/20 "2015-05-08T17:24:25Z")
I generally agree with the advice in this thread that if you want to close your 401(k), you should directly rollover your 401(k) into your IRA. I probably wouldn’t pick a credit union to put my 401(k) because, as others have noted, they probably don’t offer a lot of investment options or, if they do, those options probably have higher expenses than similar options you could find at Fidelity or Vanguard. My answers to your specific questions are below in **bold and red**. > [@LynnM](#): > > Thanks for replies–I might be getting it, but bear with me–I tend to get confused > about IRA, Roth IRA, self-managed IRA, self-directed IRA, rollover IRA, rollover Roth IRA, 401k, and a new one for me: Roth 401k. > > To recap–I want to do two things: > > **1** –Because I’m uncomfortable with stock-market valuations, I want to sell the stock mutual funds in this 401k and have cash instead of stock mutual funds. I can do this with **no tax consequences** , correct? That is, a person can buy/sell funds within a 401k or IRA with no tax consequences? > > \*\*Yes. Both IRAs and 401(k) accounts are tax-deferred, so you only pay income taxes when you withdraw money from the accounts. > \*\* > **2** –Change/convert this 401k into a “rollover IRA.” This would eliminate the 401k management/admin firm used by my previous employer. After the 401k/IRA rollover, they would have nothing to do with me. > > Am I correct in both of the above? > > \*\*Yes. If you rollover your 401(k) into an IRA account, the 401(k) administrator will no longer have anything to do with you. \*\* > > **Or do I have the order reversed** –that is, should I \*\*first \*\* rollover the 401k into IRA, and **then** sell the funds and have cash? > \*\* > You don’t have to sell your assets in the 401(k) first if you don’t want to. If you sell your 401(k) investments first, you will have to decide what you want them to be reinvested in. Your 401(k) probably offers a safe money market, treasury bill, or guaranteed income fund option. I’ve never seen a 401(k) that didn’t. You could put your money into that option for your peace of mind until your account is rolled over. > > If you don’t sell your current 401(k) investments before you roll the account over, your 401(k) administrator will sell those assets when they receive the rollover instructions. This will happen even if you roll the account over from a Fidelity administered 401(k) to a Fidelity IRA. When you open your new IRA, you will tell them how to invest the funds that are rolled over.\*\* > > Key thing–I had not considered this possibility: > > I can do the above **while still remaining with Fidelity** –right? That is, \*\*where \*\* I put the rollover IRA is a separate issue. > > \*\*Yes. You can rollover into a Fidelity IRA or an IRA anywhere else you choose. > \*\* > So, per **Martin Hyde** and **psychobunny** posts, I can do all this while **remaining at Fidelity** –dump the 401k and its management, rollover this 401k into an IRA at Fidelity. This way I’d be dealing \*\*only \*\* w/Fidelity. > > So might this be best? > > \*\*This is all true, but there is no particular reason to believe Fidelity is best. A rollover from a Fidelity-administered 401(k) to a Fidelity IRA will probably happen faster than from a Fidelity-administered 401(k) to, let’s say, Vanguard. But you might prefer to have a Vanguard IRA for other reasons. > \*\* > **1** –Do \*\*not \*\* buy/sell anything in 401k–instead, **do the rollover first at Fidelity**. So all my holdings remain the same; but they would now be in my IRA. I’d then have no 401k, thus never again any contact/dealings with the previous 401k manager. > > **Your 401(k) administrator will not transfer the holdings in your current 401(k) to your new IRA. They will sell whatever you have in the account and transfer only cash.** > > **2** –Now that all my holdings are in IRA, \*\*then \*\* sell the funds and put resulting cash into Fidelity money-market fund in the IRA. > > Is this right? \*\*Your new IRA will receive only cash from your 401(k). You can tell your new IRA trustee where to invest the rollover money from whatever options they offer. You can invest in a Fidelity money-market fund in your Fidelity IRA if that is where you want the money invested. You could just as easily choose a Vanguard money market fund in a Vanguard IRA. \*\* [Next page](https://boards.straightdope.com/t/how-to-change-a-401k-into-an-ira/719526.md?page=2)