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Starting a new job or leaving for retirement? Get a 1% match when you roll over your 401(k) into a SoFi IRA.1 We’ve teamed up with Capitalize to make the transition fast and easy.
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A rollover IRA is an individual retirement account (IRA) that you create when you want to move your money from a tax-qualified retirement account—like an employer-sponsored 401(k) or 403(b)—into an IRA account. You’d typically do this after you leave a job and can no longer contribute to the retirement plan offered by that employer. In most scenarios, there isn’t a penalty for rolling over a 401(k) or 403(b).
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When you leave a job that offered an employer-sponsored retirement account, you have to decide what to do with yours. You can choose to leave it in your old employer’s plan, move it to a new employer’s plan, or opt to roll over your 403(b) or 401(k) into an IRA. Here’s why you should consider a rollover IRA:
You can complete an IRA rollover to avoid any tax penalties you’d get if you cashed out the money for yourself. Plus it’ll continue to grow tax-deferred.
Traditional IRAs give users penalty-free withdrawal options for medical expenses, a first-time home purchase (up to $10,000), and more.
With Roth or Traditional IRAs, you may get a broader range of investment options than you would with an employer-sponsored account.
If you have more than one retirement account, you can rollover multiple 401(k) or 403(b) accounts into a single IRA.
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While IRAs can be a great retirement planning tool for many investors, there are a few instances where you may choose a different option:
By moving your funds from a 401(k) to an IRA, you may lose certain employer-specific benefits, such as employer matching contributions or access to unique investment options.
If you withdraw funds from an IRA before the age of 59 ½, you may be subject to a 10% early withdrawal penalty and taxes. In contrast, some 401(k) plans allow penalty-free withdrawals starting at age 55 if you separate from your employer.
Unlike some 401(k) plans that allow for loans, IRAs do not offer this option. If you anticipate needing to borrow against your retirement savings in the future, this could be a disadvantage.
Generally, 401(k)s have better protection under federal law against creditors and legal judgments than IRAs do, although IRAs do have some protection under bankruptcy.
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You can choose active or automated investing when you open a rollover IRA account, meaning you can take control or let us take care of the investments for you.
When you leave funds in an employer-sponsored account, you’ll likely pay higher fees. But with SoFi, you don’t need to worry about commissions or SoFi advisory fees.
** Other fees, such as exchange fees, may apply. See full fee disclosure.
Talk to one of our Financial Planners, who can help you build a retirement savings strategy—at no additional cost.
Make deposits and monitor your retirement accounts anytime, anywhere with the SoFi App.
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We’ve teamed up with Capitalize to make your 401(k) roll over to a SoFi IRA fast and easy.
Simply follow the steps below, and get rolling.
An important part of moving your old 401(k) to a new SoFi IRA is knowing your options. We’ll help you find the right IRA for your needs and assist you in opening the account online.
If you know where your 401(k) is managed, please tell us. If you’re not sure, give us the name of your former employer and we’ll find it for you, either through our database or with the help of our experts.
We’ll coordinate with your old 401(k) provider to ensure a smooth transition, handling all admin tasks along the way. We’ll provide updates and keep you in the loop, plus our experts are always available to chat.
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Capitalize makes rolling over your retirement accounts simple and stress-free, allowing you to focus on literally anything else.
Enjoy the convenience of having all your money under one digital roof with the SoFi app.
Roll over your 401(k) without touching ink and paper-Capitalize handles it all digitally.
The Capitalize concierge team has extensive experience in handling 401(k) rollovers, so they’ll make sure every detail is handled correctly.
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Take control of your retirement funds and get started with a SoFi IRA.
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While your gains depend on your investments and the market, the money in a rollover IRA account will function as it would in your employer-sponsored account.
When done correctly, an IRA rollover is tax-free. However, there are certain IRA rollover rules that can trigger taxes and penalties when transferring funds from a 403(b) or 401(k) to a new IRA.
Yes, your IRA money is yours to withdraw when you need to. Before withdrawing money from your IRA, be sure to understand IRA withdrawal rules so you can avoid extra taxes and penalties.
You can rollover your 401(k) to a SoFi IRA anytime after leaving your job. Note that if you have an outstanding loan from your previous employer’s 401(k), you may have to pay it back before rolling over your funds. Check with your previous and new providers for more details.
A direct rollover occurs when your previous retirement plan provider sends funds directly to your new provider.
An indirect rollover refers to receiving a distribution from your retirement account and having 60 days to deposit it into another account. However, it’s important to note that a 20% tax withholding applies in this case. To complete a tax-free indirect rollover of the entire distribution, you must add your own funds to cover the withheld amount. If the rollover isn’t completed within 60 days or the full amount isn’t deposited, taxes and potential penalties may apply.
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