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<<I've done the leg work and selected an on-line broker that we want to transfer the 401-k to. Now my question (finally! I hear you say), when you transfer a 401-k into an IRA with another broker do they simply transfer "ownership" of the mutual funds or do they liquidate the funds and just transfer the cash?>>

All plans are similar but different.

It depends on your 401(k) plan, your Trustee/custodian, and the asset.

If your plan is a daily valued plan (you have a 1-800 number and the market value changes on a daily basis), you MAY be able to transfer the shares.

There should not be a problem if the 401(k) plan is valued on a daily basis and owns "A" class or "B" class shares.

However, if the trustee/custodian has purchased "institutional" shares for your 401(k) account, they may not be able to convert those shares to "A" class for transfer to your IRA custodian. Institutional shares are a preferred class of mutual funds with lower fees due to guaranteed cash flowing in from your employer using it as a plan option. IRAs do not own Institutional shares.

If your plan is not daily valued, you will most likely (99% chance), be moving cash not mutual funds.
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