401K transfer to IRA

Submitted by geraldine underwood on Tue, 2018-09-11 18:34

Do I need to open a separate traditional IRA when transferring from 401K (traditional), or can I transfer into an existing IRA?

Permalink Submitted by Alan - IRA critic on Tue, 2018-09-11 19:03

You can do a direct rollover to an existing IRA. However, in some states that do not fully protect IRAs against creditors, you would probably have better creditor protection by rolling into a strictly rollover IRA, one that never received regular IRA contributions. Depends on your state or any state you might move to. Of course if the 401k balance is modest, probably not worth the effort to keep it separate.
If you plan to roll the IRA back into a future employer plan in the future, your chances are also better if you have a strictly rollover IRA. Some employer plans will not accept IRA rollovers from an IRA to which you made regular contributions.