Why is Rolling Over My 401k So Doggone Tough?

woman with arms up on beach

I’ve been meaning to roll over my 401k ever since I left my job in 2008. Like many financial chores, it seemed like a pain—even though every personal finance expert makes it sound like rollovers are a snap.

News flash: They’re wrong.

First, the terminology is confusing. I spent 45 minutes trying to figure out what a rollover is, and then called TD Ameritrade (I picked them because they have no fees or minimums for opening an IRA).

The customer service rep told me a rollover IRA is actually the same as a traditional IRA—you’re just starting (usually) with a bigger balance. Mystery solved, sort of.

But what about the standard IRA contribution limits of $5,000 per year, $6,000 if you’re over 50? How can you roll over, say, a $10,000 401k (not that mine is that big)?

Basically, you can roll over any amount. But you may not be able to contribute more money to the IRA that year, depending on how much you contributed to your 401k in the calendar year that you’re doing the rollover.

No one wants to call the IRS, but they are surprisingly nice and can answer rollover questions so that you don’t create a “tax incident” for yourself: 800-829-1040.

So am I done? Are you kidding? I’m annoyed to report that this was just the legwork—it has taken me three lunch hours, and counting.

Now I’m waiting for the paperwork from my former employer so I can actually roll over my paltry funds. Stay tuned…