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I am in the process of opening an Ameritrade account and it has asked me to specify what type of IRA I'm opening. When I called them, they said to specify a traditional IRA, but when I looked on the internet, it mentions a Rollover IRA, which is what I thought my profit-sharing transfer was.

Please help with this issue - I know I don't want the funds to come to me, but what's the difference between these two types of accounts?

Here's what I'm thinking -
I need an IRA account to hold my money. When I can think clearly, I'll pick mutual funds to spread this money into, through the IRA account. Although my new employer is offering a 401k plan, this will be seperate from that - I won't want to combine these together.

Am I on the right track here?

BA (sweating bullets and short of breath)
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If you do not intend to put your old 401k money into your new employer's 401k (or any 401k plan in the future) then you can specify that you want the funds transferred to a traditional IRA.

If there is any possibility that you might want to eventually put this money into another 401k plan somewhere else, then you should specify a rollover IRA account.
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rhecker, Thankyouthankyouthankyou!

If I can, please - why would you want to roll the money into the same 401 account? Is there some kind of advantage? Couldn't you invest in the same funds yourself, if you were that interested in them?


BA
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If I can, please - why would you want to roll the money into the same 401 account? Is there some kind of advantage? Couldn't you invest in the same fundsnyourself, if you were that interested in them?

That's a good question to which I don't know the answer. Why would you want to rollover your 401k into a new employer's 401k? Why not just transfer it to an IRA and keep it there? I am not aware of any advantages to rolling your 401k money to a new 401k. I can only think that people might do this if they are afraid of taking control of all that money themselves. Personally, I want to have as much control over my own money as possible.
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<<<<<
If I can, please - why would you want to roll the money into the same 401 account? Is there some kind of advantage? Couldn't you invest in the same funds yourself, if you were that interested in them?
>>>>>

The occasional advantages:

1) Sometimes, there is a special fund in the 401(k) not available to the general public. Generally, this is something like company stock, company preferred stock, etc.

2) You can take unlimited distributions from a 401(k) at 55, rather than 59.5 for an IRA

3) You can often get loans from a 401(k). Generally not a good idea, but it's there.

4) Depending on your state, 401(k)'s may enjoy greater protection from creditors should you go bankrupt, lose a civil suit, etc.
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Jocave replied:
<<
<<<<<
If I can, please - why would you want to roll the money into the same 401 account? Is there some kind of advantage? Couldn't you invest in the same funds yourself, if you were that interested in them?
>>>>>

The occasional advantages:

1) Sometimes, there is a special fund in the 401(k) not available to the general public. Generally, this is something like company stock, company preferred stock, etc.

2) You can take unlimited distributions from a 401(k) at 55, rather than 59.5 for an IRA

3) You can often get loans from a 401(k). Generally not a good idea, but it's there.

4) Depending on your state, 401(k)'s may enjoy greater protection from creditors should you go bankrupt, lose a civil suit, etc. >>

Generally, I agree that I would rather have the funds under my control. jocave gave the good reasons. In addition:

A) Company stock might be available for purchase at a discount.

B) For a small amount, one may not want to mess around with a separate account.

C) Investment options may be available in the 401(k) that are not available to the individual investor. These may be mutual funds with minimum investment thresholds of $25,000 or greater, or institutional-only investment vehicles.
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Before rolling over your money into your employer's 401K, get all the information you can on their expenses. I left mine at Dow Chemical until they announced some new fees they'd be charging on it, so out it went to Vanguard. Lowest expenses that I know of and you can diversify it anyway you want.
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If I can, please - why would you want to roll the money into the same 401 account? Is there
some kind of advantage? Couldn't you invest in the same fundsnyourself, if you were that
interested in them?

That's a good question to which I don't know the answer. Why would you want to rollover your 401k
into a new employer's 401k? Why not just transfer it to an IRA and keep it there? I am not aware of
any advantages to rolling your 401k money to a new 401k. I can only think that people might do this if
they are afraid of taking control of all that money themselves. Personally, I want to have as much
control over my own money as possible.


The rollover to a new rollover IRA will let you move the funds into the new employer's 401. The only advantage I can think of is that if the new 401 plan allows loans you can borrow more money. You can not borrow from an IRA
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Just make sure that if the money was in some type of tax deferred account it is rolled over into an IRA or 40lK (etc. etc.) If you move the money into an account outside that realm, there are tax implications plus a 10% penalty. That is why the rollover IRA exists.
Be sure that you don't take possession of the money.
I have found it easier to deal with the company that is taking possession of the account, they can do the entire transfer for you.
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