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Author: Hawkwin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76891  
Subject: Re: Move company 401k to IRA Date: 10/8/2012 3:44 PM
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Most important, no matter who you go with, just do a Transfer In Kind so you do not take physical delivery of the funds.

I think you are mixing up the terms.

A Transfer in Kind has to do with transfer the funds (mutual funds or stock) from one B/D to another in the form that keeps the mutual fund(s) intact. For example, if you could transfer the Fidelity Freedom 2020 Fund (FFFDX) from the 401k to an IRA in kind. You could also transfer the Fidelity Freedom 2020 (FDAFX) in kind. You could NOT transfer the Fidelity Freedom 2020 (FDIFX) in kind as it is generally only available inside a 401k. Additionally, it is uncommon for 401ks to allow for transfer in kind for anything other than individual stock. Fidelity is no exception.

A Tranfer refers to sending the funds (in the form of cash) directly to the new IRA (you never receive the check) or to you but the check is titled "New IRA Custodian, FBO you." For example, "Scottrade, FBO James Smith." A Transfer results in no tax reporting to the IRS and has no 60-day window requiring that the funds be reinvested into an IRA to avoid taxes.
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