What IRA Should I Roll My 401k Into?

What IRA Should I Roll My 401k Into?

Disclaimer: We are reader supported. We may be compensated from the links in this post, if you use products or services based on our expert recommendations.

As you approach retirement, it's essential to have a well-planned and diversified portfolio. Rolling over your 401k into an IRA can be an excellent way to achieve this. By doing so, you can take advantage of a wider range of investment options, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), precious metals, and more. Additionally, you may be able to save on fees, as many IRA providers offer lower costs than 401k plans.

With so many choices available, it's normal to feel confused or uncertain about which type of IRA to pick. In the following sections, we'll explore each type of IRA in detail, including eligibility requirements, contribution limits, tax implications, and other factors that can help you make a more informed decision. By the end of this article, you'll have a better understanding of which IRA is the best fit for your unique financial situation and retirement goals.

Protect Your Wealth & Get Huge Tax Saving!

What is an IRA?

An Individual Retirement Account is a type of investment account that provides tax-advantaged savings for retirement. They are typically opened by individuals, rather than employers, and offer a variety of assets you can hold to help grow your savings over time.

What IRA Should I Roll My 401k Into?

Types of IRAs to Roll Your 401(k) Into

If you're considering rolling over your 401(k) into an IRA, there are several types to choose from. The most common types are traditional and Roth accounts, but there are also SEP and SIMPLE IRAs that may be an option if you're self-employed or own a small business. However, gold IRAs are becoming more popular than ever for their benefits and you might want to consider this type of retirement account. Read on to know more about them

Gold IRA 

 A precious metals or gold IRA is a self-directed individual retirement account that holds physical precious metals like gold, silver, platinum, or palladium instead of traditional paper assets like stocks and bonds. It can be an attractive option for those who are looking to diversify their portfolios and protect their savings against economic downturns or inflation. With this type of retirement account, you can benefit from the potential price appreciation of precious metals, as well as the ability to physically own and store your assets. However, it's important to carefully consider the potential risks associated with this type, such as the potential for high fees, storage costs, and liquidity issues. 

Gold Companies to Work With

Additionally, it's important to work with a reputable and experienced precious metals custodian to help ensure that your assets are properly stored and managed. If you are interested in rolling your 401(k) into gold IRA but are unsure of where to start, you can consider working with these reputable companies.


Augusta Precious Metals is a company that specializes in providing its clients with physical precious metals like gold, silver, and platinum. Their standout feature is their commitment to education, as they provide free resources to help you learn about the benefits of gold investing. Additionally, they offer a wide range of IRA services, including rollover options for 401(k) accounts. On the downside, they require a high minimum investment amount. This is perfect for those who will be investing a large amount of money in metals.

#2. Goldco


Goldco is another company that specializes in the precious metals industry, with a focus on gold and silver. They are loved and trusted for their commitment to customer service, as they offer dedicated and expert professionals to help guide clients through the investment process. They also have IRA services you can avail of, including rollover options for 401(k) accounts. One potential risk associated with working with this company is its higher-than-average fees, but its service is worth the associated fees.

American Hartford Gold is a company that offers a range of precious metal products, including gold and silver coins and bars. Its standout feature is its extensive product selection, which allows clients to choose from a wide variety of options to suit their goals and risk appetites. They also offer IRA services, such as rollover options for 401(k) accounts wherein they’ll walk you through the process. However, most of their clients are concerned with their limited transparency, as some may find it difficult to determine the quality and purity of the metals they are investing in. But don’t worry since they prioritize customer satisfaction and have good customer service so clients can always ask them.

Traditional IRA

A well-known option, the traditional IRA allows you to make tax-deductible contributions, which can reduce your taxable income and potentially lower your tax bill. The money in your account grows tax-free until you withdraw it in retirement, at which point you'll pay taxes on your withdrawals. Rolling over your 401(k) into a traditional account can be a good option if you expect to be in a lower tax bracket than you are now once you retire, as you'll pay taxes on your withdrawals at your retirement income tax rate, which may be lower than your current rate.

Roth IRA

This requires after-tax contributions, meaning you'll pay taxes on the money you contribute upfront. However, the money in your account grows tax-free, and withdrawals in retirement are also tax-free. Rolling over your 401(k) into a Roth account can be advantageous if you expect to be in a higher tax bracket in retirement than you are now, as you'll pay taxes on your contributions at your current tax rate, which may be lower than your retirement rate.


A Simplified Employee Pension (SEP) IRA is an option if you're self-employed or own a small business. They allow you to contribute up to 25% of your net self-employment income, up to a certain limit of $66,000 for the year 2023. They work similarly to traditional IRAs, allowing you to make tax-deductible contributions and grow your savings tax-free until withdrawal.


A Savings Incentive Match Plan for Employees (SIMPLE) is another option for self-employed individuals or small businesses. You can contribute a percentage of your salary, and your employer can also make contributions on your behalf. They also work similarly to traditional and SEP IRAs as you can make tax-deductible contributions.

What IRA Should I Roll My 401k Into?

Why You Should Roll Your 401k Into an IRA

  • Tax advantages - The most significant advantage is its tax benefits. For example, contributions to traditional IRAs are generally tax-deductible, reducing your taxable income for the year. The money in your account grows tax-free until you withdraw it in retirement, at which point you'll pay taxes on your withdrawals. Roth IRAs work differently, with contributions being made with after-tax dollars but allowing tax-free withdrawals in retirement.
  • More investment options - By rolling over your 401(k) into an IRA, you gain access to a wider range of investment options. This can include a larger selection of mutual funds, ETFs, individual stocks, bonds, precious metals, and other products that may not be available in your 401(k) plan. Having more choices allows you to build a portfolio that more closely aligns with your financial goals and risk tolerance.
  • Better control over your investments - Unlike employer-sponsored retirement plans, which may limit your investment options or impose early withdrawal penalties, IRAs provide more choices and greater control over your retirement savings. You can invest in individual stocks and bonds or lower-cost funds as you have more control over your account's investment possibilities and how you use your funds. You are free to make your own decisions and portfolio adjustments as needed based on your financial goals. Also, you may manage your account online, which might make it simpler to execute transactions and keep track of your investments.
  • Lower fees - 401(k) plans can come with high fees and expenses, which can eat into your returns over time. IRAs, on the other hand, typically have lower fees and expenses, which can save you money in the long run. Also, you might be able to benefit from tax advantages depending on the type of account you select. With time, these can help you minimize your tax liability and increase your retirement savings.
  • Easier estate planning - IRAs are advantageous when it comes to estate planning. You can name multiple beneficiaries, which can be useful if you have a blended family or want to leave money to multiple heirs. You can also set up trusts within your retirement account, which can help you manage the distribution of your assets after you pass away.
  • More flexibility with withdrawals - 401(k) plans often have strict rules about when and how you can withdraw your money. With an IRA, you have more flexibility. For example, you can withdraw contributions from a Roth account penalty-free at any time, as long as you are past a certain age. 
  • Simplified record - keeping - You can streamline your record-keeping by converting your 401(k). Having all of your retirement funds in one location might make it simpler to manage investments and track your advancement toward retirement objectives.
  • No required minimum distributions for Roth IRAs - Unlike 401(k) plans, this type of account has no required minimum distributions (RMDs) during your lifetime. This means you can let your money grow tax-free for as long as you want, which can be beneficial if you don't need the money right away and want to pass it on to your heirs.

In summary, this kind of retirement account is a tax-advantaged investment account that provides more options and greater control over your retirement savings than employer-sponsored retirement plans. Understanding the different types and their unique features can help you make a more informed decision about which one is right for you.

What IRA Should I Roll My 401k Into?

Process of Rollovers

Once you've made the decision to transfer your 401(k) to a particular kind of retirement account, the procedure is rather simple. It's crucial to keep in mind that there are specific guidelines and time constraints that you must adhere to. For instance, you typically have 60 days from the distribution date to finish the rollover. You can be charged taxes and fines if you don't meet this deadline.

In order for the funds in your 401(k) to be deposited straight into your new account, it's crucial that your rollover be completed as a direct rollover. This is significant since choosing an indirect rollover may subject you to additional taxes and penalties.  

An indirect rollover is a process where you take money out of one retirement account, and then put it into another retirement account. This means that you’ll be taking distributions from your account, which you will then deposit into your new IRA. The only situation where this type of rollover is necessary is if the account holder needs to use the money urgently.

Here are the steps you'll need to take:

  • Open an Account - Creating an IRA account is the first step. Do this with a broker or other financial institution. Depending on your financial condition and goals, you can select a regular, Roth, or SEP account. Take note that you must meet certain eligibility requirements and contribution restrictions in order to open an account, which varies depending on the type. For instance, the income restrictions for traditional and Roth accounts differ, and the annual contribution limitations might fluctuate.
  • Contact your 401(k) provider - You should now talk to your previous provider to express your intent of rolling over to an IRA and request a rollover distribution form. Send them the form with your contact information and information about your new account. You can check your account to see if the funds have already been received after the request has been processed.  If you are planning to do an indirect rollover, you can instead request contributions from your provider. Once this has been approved the funds will be sent to you. You will then need to deposit the funds to your new account personally. Afterward, you are required to report the indirect rollover on your tax return.
  • Start investing and monitor them - After the funds have been deposited into your new account, you must choose the investments you want to make and keep track of them. Choose your assets carefully as you can hold various types such as stocks and precious metals in your account. Make sure the assets you choose are in line with your objectives and risk appetite. Also, you need to regularly check on them to make sure they still match your investment expectations and goals.

Pros & Cons of Rollovers

Here are the factors that you should take into consideration when rolling your 401(k) over.


  • One-stop Account - Managing savings spread across multiple plans can be difficult, thus it's better to have fewer accounts. With this kind of account, you can hold different types of assets.
  • Easy process - Rolling over your old account into a new one is a straightforward process. You only need to open a new account and provide instructions to transfer the funds from the old one.
  • Flexibility - You have more control over your investments with an individual retirement account, including when and how you withdraw funds. You can also change your investments easily and without having to get approval from an employer.


  • Limited access before age 59 ½ - With a 401(k), you can take penalty-free withdrawals as early as age 55 if you leave your employer or retire. However, with an IRA, you generally have to wait until age 59 1/2 to take penalty-free withdrawals. If you need to access your retirement savings before this age, you may face penalties and taxes.
  • Rollover risks - If you're not careful, you could inadvertently have taxes or penalties. For example, if you take a distribution from your 401(k) and fail to deposit it into an account within 60 days, you could be subject to taxes and penalties. It's important to understand the rules and follow them carefully.
  • Required minimum distributions - Once you reach age 72, you'll be required to take minimum distributions from your traditional retirement account each year. This can reduce your overall retirement savings and may increase your taxable income. However, Roth accounts do not have the required minimum distributions.

Final Thoughts

In conclusion, rolling over your 401(k) into an IRA can offer several benefits, including more investment options, greater control over your investments, and potentially lower fees. However, it's important to consider the potential drawbacks for each type, such as limited access to funds before age 59 1/2 and also the risk of triggering taxes or penalties if the rollover process isn't handled carefully. Ultimately, the decision of rolling over your 401(k) into a specific retirement account will depend on your individual financial situation and retirement goals. It may be helpful to consult with a financial advisor to determine what option is best for you.