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Which account type should I open to complete my 401k rollover?

Most plans we see are Traditional 401(k) plans, which means you must roll over into a Traditional IRA. However, if your plan is a Designated Roth Account (like a Roth 401(k)), you must roll over into a Roth IRA. Lastly, some plans actually allow you contribute both Roth and Traditional funds. In that case, you’ll need to open both a Roth IRA and a Traditional IRA account. If you are not sure, just remember that Traditional plans allow you to invest pre-tax dollars, whereas with Roth plans you must invest post-tax dollars. In both cases your account must meet our $500 minimum.

See the below chart for more details about where you should “roll to” depending on where you are rolling from.

 

Note: This chart has been adapted from the IRS Rollover Chart and modified Wealthfront-specific account support. Source:https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

Please see the IRS website for more information

 
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Wealthfront prepared this article for informational purposes and not as an offer, recommendation, or solicitation to buy or sell any security. Wealthfront and its affiliates may rely on information from various sources we believe to be reliable (including clients and other third parties), but cannot guarantee its accuracy or completeness. See our Full Disclosure for more important information.

Wealthfront and its affiliates do not provide tax advice and investors are encouraged to consult with their personal tax advisor. Financial advisory and planning services are only provided to investors who become clients by way of a written agreement. All investing involves risk, including the possible loss of money you invest. Past performance does not guarantee future performance.

Wealthfront prepared this article for informational purposes and is not intended as tax advice nor as an offer, recommendation, or solicitation to buy or sell any security. Wealthfront does not represent that any strategy will result in any of the outcomes described, including the effectiveness of any strategy in reducing tax liability, as this depends on an investor’s specific tax and investment profile. Investors are encouraged to consult their personal tax advisors regarding their unique circumstances and any outcomes/consequences that may result from any investment strategy. Investors and their personal tax advisors are responsible for how the transactions in an account are reported to the IRS or any other taxing authority.

Wealthfront and its affiliates may rely on information from various sources we believe to be reliable (including clients and other third parties), but cannot guarantee its accuracy or completeness. See our Full Disclosure for more important information. Financial advisory and planning services are only provided to investors who become clients by way of a written agreement. All investing involves risk, including the possible loss of money you invest. Past performance does not guarantee future performance.

Financial advisory, planning, and investment management services are offered by Wealthfront Inc. (“Wealthfront”), an SEC registered investment adviser. Brokerage products and services offered by Wealthfront Brokerage Corporation, member FINRA / SIPC, and a wholly-owned subsidiary of Wealthfront.