How Do I Open a TD Ameritrade IRA?
Don’t have a TD Ameritrade IRA? You can open an account…
It will take you about 15 minutes to open your IRA online.
Be sure to select “IRA Rollover”, fill in your contact information, and designate a beneficiary.
If you have questions about your 401(k) rollover, you can call 800-454-9272 to speak with a TD Ameritrade knowledgeable New Account Representative.
5 Steps to Roll Over Your 401(k) to TD Ameritrade
Here are the five simple steps to completing your 401(k) into a TD Ameritrade IRA:
Confirm a few key details about your 401(k) plan
Make sure you’re eligible to roll over your existing 401(k) plan. From there, you’ll need to make sure your 401(k) tax status is the same as the IRA you plan to move the funds into to avoid a costly penalty. For example, a tax-deferred traditional 401(k) should be moved into an IRA, whereas an after-tax Roth 401(k) should be moved into a Roth IRA.
Decide where to move your money
If you choose to move your 401(k) account balance into an IRA at TD Ameritrade, make sure you have the account number of that IRA handy. Note that if you don’t yet have an IRA account, you will need to open an account first by following the instructions above
Contact your 401(k) provider to authorize the transfer
You’ll need to reach out to your 401(k) provider to authorize the transfer of your 401(k) funds into your new account.
Get a rollover check in the mail and deposit it into your new account
Make sure you understand the differences between an indirect and a direct rollover. Depending on what type of rollover, you’ll have different instructions to complete the process. At a high level, you’ll need to make sure you receive the 401(k) funds in the form of a check and deposit them into your TD Ameritrade IRA account.
Make sure your funds are invested properly
It’s likely best to speak to a financial advisor to help you make your investment allocations.
The Pros and Cons of Rolling Over Your Old 401(k) into a TD Ameritrade IRA
When it comes to retirement planning, one of the decisions you may face is what to do with your old 401(k).
Rolling over your old 401(k) into an Individual Retirement Account (IRA) is a crowd favorite. Let’s explore why, and also take a look at some potential drawbacks.
Advantages of Rolling Over Your Old 401(k) into a TD Ameritrade IRA
- Tax-Deferred Growth: Your investments will continue to grow tax-deferred until you withdraw them, similar to your 401(k).
- Investment Options: At TD Ameritrade, you’ll have access to a wide range of investment products, including mutual funds, ETFs, stocks, bonds, options trading, and more.
- Resources and Tools: TD Ameritrade offers a wealth of resources and tools to help you manage your IRA effectively.
- Flexibility: You may have the flexibility to convert to a Roth IRA, providing further tax advantages. (IRA contributions must be in accordance with IRS rules and contribution limitations)
- Future Movement: You retain the option to move assets to a future employer’s plan later if desired.
- Special Withdrawals: Under special circumstances, you may be able to take penalty-free withdrawals prior to age 59½. Note that these withdrawals only happen in exceptional circumstances.
- No Annual Maintenance Fee: Your TD Ameritrade IRA will not incur an annual account maintenance fee.
Before making a decision, weigh these pros and cons, consider your financial situation, and think about your retirement goals. A consultation with a financial advisor can provide personalized investment advice, so consider having a conversation if you deem it necessary.
Disadvantages of Rolling Over Your Old 401(k) into a TD Ameritrade IRA
- Loan Restrictions: Unlike some 401(k) plans, you cannot take out a loan against your IRA.
- Loan Repayment: Any outstanding plan loan balances need to be repaid prior to rolling over, or you may incur income taxes and potentially a 10% tax penalty.
- Trading-Related Expenses: Your investment activity may incur trading-related expenses, including commissions.
- Limited Investment Access: You may not have access to the exact same investments in an IRA brokerage account that you had in your previous employer-sponsored plan.
- Creditor Protection: The level of protection from creditors for assets in an IRA is lower than in a 401(k) plan.
- Tax Implications for Employer Stock: If you hold appreciated employer stock in your former employer’s plan account, and you transfer it to an IRA, there may be tax consequences upon selling it. It’s advisable to consult with a tax advisor for this matter.
It’s important to weigh these pros and cons and consider your own financial situation and retirement goals before making a decision.
Consulting with a financial advisor can provide personalized investment advice tailored to your circumstances.