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Generally, a rollover is when you move funds from one investment to a similar investment. In the context of retirement savings, rollover means the tax-free movement of money from a 401(k) or other tax-deferred or tax-free retirement account into another retirement account. Or, when a bond reaches maturity, for example, you might roll the proceeds into another bond. Rollovers often take place as a result of a job change, when the account holder has the opportunity to move money from one employer's retirement account to another or into an individual retirement account (IRA).
Why does this matter?
Because it's your money and you want to make the most of it. When you leave a job, you may decide to leave your 401(k) plan behind. You also have the right to roll your money into an IRA or withdraw the money from your account. And you may be able to move it into a new employer's plan. Just make sure you know the benefits and penalties involved with each choice.
Ask yourself some questions before rolling over your 401(k).
Are you satisfied with the way your previous employer's 401(k) plan performed and was managed? How do the fees compare to new plans you're considering? Do the new plans you're considering offer enough investment options?
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