This 401(k) rollover checklist from First Premier Bank lists the steps for moving an old employer plan into an IRA, in the order they come due. Start with the paperwork and the tax question; the trade comes last.
If you left the service and started a second career, you may hold a TSP balance and a 401(k) from your first civilian job. This page is about the old 401(k). The TSP has its own rules, which First Premier Bank covers in its TSP to IRA rollover work.
Before you call the plan
Two phone calls cost nothing and settle most of what delays a rollover. Do them first, one decision at a time.
- Balance: pull the latest year-end statement and note pre-tax, Roth and after-tax amounts separately.
- Company stock: check whether the account holds employer shares, because those can have special tax treatment worth pricing first.
- Loans: ask whether an outstanding 401(k) loan exists; an unpaid loan can be treated as a taxable distribution.
- Fees and funds: ask the plan what it charges, then compare that with the IRA you're considering.
Can I roll over without a tax cost?
Yes, if the money moves directly from the old plan to the new IRA and the account types match. A pre-tax 401(k) goes to a traditional IRA; a Roth 401(k) goes to a Roth IRA.
Say a hypothetical veteran has $300K pre-tax in an old 401(k). A check made out to her personally usually has 20% withheld, so $60K is held back. To avoid a tax cost she'd have to replace that $60K from savings within 60 days. A direct rollover skips the problem.
- Open the IRA: set it up at the receiving firm before you request anything.
- Ask for a direct rollover: the plan sends funds to the IRA custodian, not to you.
- Get the payee line right: it should read the custodian's name "FBO" your name.
- Keep Roth money separate: confirm the plan's Roth start date for the five-year clock.
The paperwork and the waiting
Plans usually want a distribution form, sometimes a signature guarantee or notarization. Expect the check or transfer to take a few weeks, and longer if the plan mails paper.
- Submit the form: keep a copy and the date you sent it.
- Track the check: call the plan if nothing has moved after 2 weeks.
- Watch the January mail: the 1099-R should show a direct rollover, not a taxable payout.
Should I invest the money right away?
Not always. Cash arriving in an IRA sits uninvested until you choose something, so decide on the mix before the transfer lands. Every investment carries the risk of loss, including the money you started with.
Before First Premier Bank suggests a fund change, it estimates the tax cost of the switch. Inside an IRA that cost is usually nil, but selling company stock beforehand may not be. If you also hold a military pension, a Survivor Benefit Plan election or a TSP balance, that income shapes how much risk the IRA should carry.
Rolling over isn't always the right call. A plan with low costs and strong funds can be worth keeping, and a 401(k) generally allows income draws after separation at 55 without the early penalty that an IRA carries. Check before you move.
- Match your income: note your pension, TSP and expected Social Security.
- Pick the mix: write down the percentages before you place the trade.
- Name beneficiaries: update them on the new IRA the same week.
Frequently asked questions about First Premier Bank
How long does a 401(k) rollover take for a veteran with an old employer plan?
Will my rollover show up on my tax return?
Can I roll my old 401(k) into my TSP instead?
This is general information and education, not individual investment, tax, or legal advice. Investing involves risk, including loss of principal. Before making any financial decision, talk to a qualified professional about your specific circumstances.