Moving 401k balance into self-directed IRA
"Your question asks ""how"" but ""if"" may be your issue. Most companies will not permit an external transfer while still employed, or under a certain age, 55 or so.  If yours is one of the rare companies that permits a transfer, you simply open an IRA with the broker of your choice. Schwab, Fidelity, eTrade, or a dozen others. That broker will give you the paperwork you need to fill out, and they initiate the transfer.  I assume you want an IRA in which you can invest in stocks or funds of your choosing. A traditional IRA. The term ""self-directed"" has another meaning, often associated with the account that permits real estate purchases inside the account. The brokers I listed do not handle that, those custodians have a different business model and are typically smaller firms with fewer offices, not country-wide."
It depends how you do it.  If you roll it from your 401k directly to a Roth then you will have to pay the taxes.  The contributions to the 401k are tax deferred.  Meaning you do not owe taxes on the money until you collect it.  Roth contributions are post tax but the gains are not taxed so long as they are disbursed under acceptable conditions according to the regulations. If you roll it directly from the 401k to a regular tax deferred IRA you should be able to do that with out penalties or taxes.  You will still have to pay the taxes at disbursement. If you have the money disbursed to you directly then you will have to pay the penalties, fees, and taxes.  Your contributions to an IRA will then be subject to limitations based on the IRA.  It will literally be exactly like you are taking money from your pocket to invest in the IRA.   Your company should give you the option of a rollover check.  This check will be made out to you but it will not be able to be deposited in a regular account or cashed.  It will only be redeemable for deposit into a retirement account that meets the regulatory requirements of the 401k rollover criteria.  I believe the check I received a few years ago was only good for 60 days.  I recall that after 60 days that check was void and I would receive a standard disbursement and would be subject to fees and penalties.  I am not sure if that was the policy of T.Rowe Price or if that is part of the regulation. The time horizon for your 401K/IRA is essentially the same, and it doesn't stop at the day you retire. On the day you do the rollover you will be transferring your funds into similar investments. S&P500 index to S&P 500 index; 20xx retirement date to 20xx retirement date; small cap to small cap... If your vested portion is worth X $'s when the funds are sold, that is the amount that will be transferred to the IRA  custodian or the custodian for the new employer. Use the transfer to make any rebalancing adjustments that you want to make. But with as much as a year before you leave the company if you need to rebalance now, then do that irrespective of your leaving. Cash is what is transferred, not the individual stock or mutual fund shares. Only move your funds into a money market account with your current 401K if that makes the most sense for your retirement plan. Also keep in mind unless the amount in the 401K is very small you don't have to do this on your last day of work. Even if you are putting the funds in a IRA wait until you have started with the new company and so can define all your buckets based on the options in the new company. Most 401k plans (maybe even all 401k plans as a matter of law) allow the option of moving the money in your 401k account from one mutual fund to another  (within the group of funds that are in the plan).  So, you can exit from one fund and put all your 401k money (not just the new contributions) into another fund in the group if you like.  Whether you can find a fund within that group that invests only in the companies that you approve of is another matter. As mhoran_psprep's answer points out, changing investments inside a 401k (ditto IRAs, 403b and 457 plans) is without tax consequence which is not the case when you sell one mutual fund and buy another in a non-retirement account. One representative I spoke to suggested moving the money into a new   IRA, making up the difference from my own pocket, and then asking for   a rebate a tax time. Will this work? That's probably the only thing that will work, and you have to do this ASAP: you have 60 days from the distribution to complete the deposit. Make sure to make up for the withheld 20%, and deposit into the IRA the full amount, and make sure to give all the relevant information to your tax preparer to ensure you do get the withheld 20% back as a tax credit. You can check with your current 401k plan if you can deposit there, but in many cases you cannot. IRA is a safe bet. The simplest way to consolidate the funds your old 401(k) plans is by doing what's called a Direct Rollover (whereby the funds go directly into the new plan and skips you completely) from each of the old plans into either an IRA that you establish with a provider of your choice or even into your current employer's 401(k) plan if that is available. That way, the funds are in one central account and available to invest. Plus it eliminates the mandatory 20% withholding if the rollover is indirect and is sent to you first before the deposit into the new plan. It is important to bear in mind that you have 60 calendar days from the date of distribution to get the full amount into the new plan and a rollover is considered a tax reportable, but not necessarily a taxable event provided you deposit the funds within the time frame allotted. There is no segregation of amounts that you have in Rollover (Traditional) IRAs when it comes to figuring out how much of your basis is being converted from  your Traditional IRA into a Roth IRA.   So, yes, you will lose the benefit of being able to make nondeductible contributions to your Traditional IRA each year and rolling them over into a Roth IRA without tax consequences. Since your  401k amount may be  substantially more than the $5K basis you create each year, converting the 401k amount into a Traditional IRA will mean that most of the money converted to the Roth IRA is pre-tax money, and so you end up paying tax on most of the converted amount. The first question is essentially asking for specific investment advice which is off-topic per the FAQ, but I'll take a stab at #2 and #3 (2) If my 401k doesn't change before I leave my job (not planned in the   near future), I should roll it over into my Roth IRA after I leave due   to these high expense ratios, correct? My advice is that you should roll over a 401K into an IRA the first chance you get (usually when you leave the job). 401K plans are NOTORIOUS for high expense ratios and why leave your money in a plan where you have a limited choice of investments anyway versus a self-directed IRA where you can invest in anything you want? (3) Should I still max contribute with these horrible expense ratios? If they are providing a match, yes. Even with the expense ratios it is hard to beat the immediate return of an employer match.  If they aren't matching, the answer is still probably yes for a few reasons: You already are maxing out your ability to contribute to sheltered accounts, so assuming you still want to sock away that money for retirement, the tax benefits are still valuable and probably offset the expense ratios. Although you seem to be an exception, it is hard for most people to be disciplined enough to put money in a retirement account after they have it in their hands (versus auto-deduction from paychecks). I use the self-directed option for the 457b plan at my job, which basically allows me to invest in any mutual fund or ETF. We get Schwab as a broker, so the commissions are reasonable. Personally, I think it's great, because some of the funds offered by the core plan are limited. Generally, the trustees of your plan are going to limit your investment options, as participants generally make poor investment choices (even within the limited options available in a 401k) and may sue the employer after losing their savings. If I was a decision-maker in this area, there is no way I would ever sign off to allowing employees to mess around with options. You can do this with no problem. What you want is a direct transfer style of rollover. This is simply where the money is transferred from your 401(k) custodian directly to your new IRA custodian. This will ensure there are no taxes or penalties on the balance.  The key is that the money is moving directly to the new account without you having direct access to the balance. This keeps the money out of your hands in the eyes of the IRS. The process should look something like this: A few notes: "This is not a direct answer to your question, but you might want to consider whether you want to have a financial planner at all. Would a large mutual fund company or brokerage serve your needs better than a bank? You are still quite young and so have been contributing to IRAs for only a few years. Also, the wording in your question suggests that your IRA investments have not done spectacularly well, and so it is reasonable to infer that your IRA is not a large amount, or at least not as large as what it would be 30  years from now. At this level of investment, it would be difficult for you to find a financial planner who spends all that much time looking after your interests. That you should get away from your current planner, presumably a mid-level employee in what is typically called the trust division of the bank, is a given.  But, to go to another bank (or even to a different employee in the same bank), where  you will also likely be nudged towards investing your IRA in CDs, annuities, and a few mutual funds with substantial sales charges and  substantial annual expense fees, might just take you from the frying pan into the fire. You might want to consider transferring your IRA to a large mutual fund company and investing it in something simple  like one of their low-cost (meaning small annual expense ratio) index funds. The Couch Potato portfolio suggests equal amounts invested in a no-load S&P 500 Index fund and a no-load Bond Index fund, or a 75%-25% split favoring the stock index fund (in view of your age and the fact that the IRA should be a long-term investment).  But the point is,  you can open an IRA account, have the money transferred from your IRA account with the bank, and make the investments on-line all by yourself instead of having a financial advisor do it on your behalf and charge you a fee for doing so (not to mention possibly screwing it up.) You can set up Automated Investment too; the mutual fund company will gladly withdraw money from your checking account and invest it in whatever fund(s) you choose.  All this is not complicated at all.  If you would like to follow the Couch Potato strategy and rebalance your portfolio once a year, you can do it  by yourself too. If you want to invest in funds other than the S&P 500 Index fund, etc. most mutual fund  companies offer a ""portfolio analysis"" and advice for a fee (and the fee is usually waived when the assets increase above certain levels - varies from company to company).  You could thus have a portfolio analysis done each year, and hopefully it will be free after a few more years.  Indeed, at that level, you also typically get one person assigned as your advisor, just as you have with a bank. Once you get the recommendations, you can choose to follow them  or not, but you have control over how and where your IRA assets are invested.  Over the years, as your IRA assets grow, you can branch out into  investments other than ""staid"" index funds, but right now, having a financial planner for your IRA might not be worth it. Later, when you have more assets, by all means if you want to explore investing in specific stocks with a brokerage instead of sticking to mutual funds only but this might also mean phone calls urging you to sell Stock A right now, or buy hot Stock B today etc. So, one way of improving your interactions and have a better experience with your new financial planner is to not have a planner at all for a few years and do some of the work yourself." "All transactions within an IRA are irrelevant as far as the taxation of the  distributions from the IRA are concerned. You can only take cash from an IRA, and a (cash) distribution from a Traditional IRA is taxable as ordinary income (same as interest from a bank, say) without the advantage of any of the special tax rates for long-term capital gains or qualified dividends even if that cash was generated within the IRA from sales of stock etc. In short, just as with what is alleged to occur with respect to Las Vegas, what happens within the IRA stays within the IRA. Note: some IRA custodians are willing to make a distribution of stock or mutual fund shares to you, so that ownership of the 100 shares of GE, say, that you hold within your IRA is transferred to you in your personal (non-IRA) brokerage account. But, as far as the IRS is concerned, your IRA custodian sold the stock as the closing price on the day of the distribution, gave you the cash, and you promptly bought the 100 shares (at the closing price) in your personal brokerage account with the cash that you received from the IRA. It is just that your custodian saved the transaction fees involved in selling 100 shares of GE stock inside the IRA and you saved the transaction fee for buying 100 shares of GE stock in your personal brokerage account. Your basis in the 100 shares of GE stock is the ""cash_ that you imputedly received as a distribution from the IRA, so that when you sell the shares at some future time, your capital gains (or losses) will be with respect to this basis. The capital gains that occurred within the IRA when the shares were imputedly sold by your IRA custodian remain within the IRA, and you don't get to pay taxes on that at capital gains rates. That being said, I would like to add to what NathanL told you in his answer. Your mother passed away in 2011 and you are now 60 years old (so 54 or 55 in 2011?). It is likely that your mother was over 70.5 years old when she passed away, and so she likely had started taking Required Minimum Distributions from her IRA before her death. So, You should have been taking RMDs from the Inherited IRA starting with Year 2012. (The RMD for 2011, if not taken already by your mother before   she passed away, should have been taken by her estate, and distributed to her heirs in accordance with her will, or, if she died intestate, in accordance with state law and/or probate court directives). There would   not have been any 10% penalty tax due on the RMDs taken by you on the grounds that you were not 59.5 years old as yet; that rule applies to owners (your mom in this case) and not to beneficiaries (you in this case). So, have you taken the RMDs for 2012-2016? Or were you waiting to turn 59.5 before taking distributions in the mistaken belief that you would have to pay a 10% penalty for early wthdrawal?  The penalty for not taking a RMD is 50% of the amount not distributed; yes, 50%. If you didn't take RMDs from the Inherited IRA for years 2012-2016, I recommend that you consult a CPA with expertise in tax law. Ask the CPA if he/she is an Enrolled Agent with the IRS: Enrolled Agents have to pass an exam administered by the IRS to show that they really understand tax law and are not just blowing smoke, and can represent you in front of the IRS in cases of audit etc," I have managed two IRA accounts; one I inherited from my wife's 401K and my own's 457B.  I managed actively my wife's 401 at Tradestation which doesn't restrict on Options except level 5 as naked puts and calls. I moved half of my 457B funds to TDAmeritrade, the only broker authorized by my employer, to open a Self Directed account.  However, my 457 plan disallows me from using a Cash-secured Puts, only Covered Calls.  For those who does not know investing, I resent the contention that participants to these IRAs should not be messing around with their IRA funds.  For years, I left my 401k/457B funds with my current fund custodian, Great West Financial.  I checked it's current values once or twice a year. These last years, the market dived in the last 2 quarters of 2015 and another dive early January and February of 2016.  I lost a total of $40K leaving my portfolio with my current custodian choosing all 30 products they offer, 90% of them are ETFs and the rest are bonds. If you don't know investing, better leave it with the pros - right?  But no one can predict the future of the market.  Even the pros are at the mercy of the market. So, I you know how to invest and choose your stocks, I don't think your plan administrator has to limit you on how you manage your funds. For example, if you are not allowed to place a Cash-Secured Puts and you just Buy the stocks or EFT at market or even limit order, you buy the securities at their market value. If you sell a Cash-secured puts against the stocks/ETF you are interested in buying, you will receive a credit in fraction of a dollar in a specific time frame.  In average, your cost to owning a stock/ETF is lesser if you buy it at market or even a limit order.  Most of the participants of the IRA funds rely too much on their portfolio manager because they don't know how to manage. If you try to educate yourself at a minimum, you will have a good understanding of how your IRA funds are tied up to the market.  If you know how to trade in bear market compared to bull market, then you are good at managing your investments.  When I started contributing to my employer's deferred comp account (457B) as a public employee, I have no idea of how my portfolio works.  Year after year as I looked at my investment, I was happy because it continued to grow.  Without scrutinizing how much it grew yearly, and my regular payroll contribution, I am happy even it only grew 2% per year.  And at this age that I am ready to retire at 60, I started taking investment classes and attended pre-retirement seminars.  Then I knew that it was not totally a good decision to leave your retirement funds in the hands of the portfolio manager since they don't really care if it tanked out on some years as long at overall it grew to a meager 1%-4% because they managers are pretty conservative on picking the equities they invest.  You can generalize that maybe 90% of IRA investors don't know about investing and have poor decision making actions which securities/ETF to buy and hold. For those who would like to remain as one, that is fine.  But for those who spent time and money to study and know how to invest, I don't think the plan manager can limit the participants ability to manage their own portfolio especially if the funds have no matching from the employer like mine. All I can say to all who have IRA or any retirement accounts, educate yourself early because if you leave it all to your portfolio managers, you lost a lot.  Don't believe much in what those commercial fund managers also show in their presentation just to move your funds for them to manage.  Be proactive.  If you start learning how to invest now when you are young, JUST DO IT! TL; DR version:  What you propose to do might not save you taxes, and may well be illegal. Since you mention your wife, I assume that the Inherited IRA has been inherited from someone other than your spouse; your mother, maybe, who passed away in Fall 2015 as mentioned in your other question (cf. the comment by Ben Miller above)? If so, you must take (at least) the Required Minimum Distribution (RMD) from the Inherited IRA each year and pay  taxes on the distribution. What the RMD is depends on how old the Owner of the IRA was when the Owner passed away, but in most cases, it works out to be the RMD for you, the Beneficiary, considered  to be a Single Person (see Publication 590b, available on the IRS web site for details). So, Have you taken the (at least) the RMD amount for 2016 from this Inherited IRA? If not, you will owe a 50% penalty of the difference   between the amount withdrawn and the RMD amount. No, it is not a typo;   the penalty (it is called an excise tax) is indeed 50%. Assuming that the total amount that you have taken as  a Distribution from the Inherited IRA during 2016 is the  RMD for 2016 plus possibly some extra amount $X, then that amount is included in your taxable income for that year.  You cannot rollover any part of the total amount distributed into  your own IRA and thereby avoid taxation on the money. Note that it does not matter whether you will be rolling over the money into an existing IRA in your name or will be establishing a new rollover IRA account in your name with the money: the prohibition applies to both ways of handling the matter. If you wish, you can roll over up to $X (the amount over and above the RMD) into a new Inherited IRA account titled exactly the same as the existing Inherited IRA account with a different custodian. If you choose to do so, then the amount that you roll over into the new Inherited IRA account will not included in your taxable income for 2016. To my mind, there is no point to doing such a rollover unless you are unhappy with the current custodian of your Inherited IRA, but the option is included for completeness. Note that the RMD amount cannot be rolled over in this fashion; only the excess over the RMD. If you don't really need to spend the money distributed from your Inherited IRA for your household expenses (your opening statement that your income for 2016 is low might make this unlikely), and (i) you and/or your spouse received compensation (earned income such as wages, salary, self-employment income, commissions for sales, nontaxable combat pay for US Military Personnel, etc) in 2016, and (ii) you were not 70.5 years of age by December 2016,  then you and your wife can make  contributions to existing IRAs in your names  or establish new IRAs in your names.  The amount that can be contributed for each IRA is limited to the smaller of $5500 ($6500 for people over 50) and that person's compensation for 2016, but if a joint tax return is filed for 2016, then both can make contributions to their IRAs as long as the sum of the amounts contributed to the IRAs does not exceed  the total compensation reported on the joint return.  The deadline for making such IRA contributions is the due date for your 2016 Federal income tax return. Since your income for 2016 is less than $98K, you can deduct the entire IRA contribution even if you or your wife are covered by an employer plan such as a 401(k) plan.  Thus, your taxable income will be reduced by the IRA contributions (up to a maximum of $11K (or $12 K or $13K depending on ages)) and this can offset the increase in taxable income due to the  distribution from the Inherited IRA.      Since money is fungible, isn't this last bullet point achieving the same result as rolling over the entire $9.6K (including the RMD) into an IRA in your name, the very thing that the first bullet point above says cannot be done? The answer is that it really isn't the same result and differs from what you wanted to do in several different ways. First, the $9.6K is being put into IRAs for two different people  (you and your wife) and not just you alone. Should there, God forbid, be an end to the marriage, that part of your inheritance is gone. Second, you might not even be entitled to make contributions to IRAs (no compensation, or over 70.5 years old in 2016) which would make the whole thing moot. Third, the amount that can be contributed to an IRA is limited to $5500/$6500 for each person. While this does not affect the present case, if the distribution had been $15K instead of $9.6K,  not all of that money could be contributed to IRAs for you and your wife. Finally, the contribution to a Traditional IRA might be non-deductible for income tax purposes because the Adjusted Gross Income is too high;  once again, not an issue for you for 2016 but something to keep in mind for future years. In contrast, rollovers from one IRA into another IRA (both titled the same) can be in any amount, and they can be done at any time regardless of whether there is compensation for that year or not or what the Adjusted Gross Income is or whether there is coverage by a 401(k) plan. There are no  tax consequences to rollovers unless the rollover is from a Traditional IRA to a Roth IRA in which case, the distribution is included in taxable  income for that year.  What is prohibited is taking the entire amount of the $9.6K distribution from an Inherited IRA and rolling it over  into your existing IRA (or establishing a Rollover IRA in your name with that $9.6K); ditto for some money going into your IRA and some into your wife's IRA. I expect that any IRA custodian will  likely refuse to allow you to carry out such a rollover transaction but will be glad to accept 2016 contributions (in amounts of up to $5500/$6500) from you into existing IRAs or open a new IRA for you. The custodian will not ask whether you have compensation for 2016 or not (but will check your age!); it is your responsibility to ensure that you do not contribute more than the compensation etc. Incidentally, subject to the $5500/6500 maximum limit, you can (if you choose to do so) contribute the entire amount of your compensation to an IRA, not just the take-home pay amount (which will be smaller than your compensation because of withholding for Social Security and Medicare tax, State and Federal income tax, etc). Direct roll-overs / trustee to trustee transfers are typically initiated by the receiving institution. Therefore you need to work with Vanguard. They will have a form in which you provide them with your fidelity account info and they will then contact Fidelity and initiate the transfer.  Do not take the option of being sent a check made out to you by Fidelity (an indirect rollover). There are too many ways to muck up and get hit with penalties if you are the middleman in the process. I believe in most, if not all, cases the IRS now requires a 20% withholding on indirect 401k rollovers. This is because too many times people would initiate a roll over but not complete it either at all or within the allowed 60 day window and then come tax time be unable to pay the tax and penalty on the distribution. The tricky part of that withholding is that you still have to deposit that amount into the new account otherwise it becomes a distribution subject to tax and penalties (and that means coming up with the money from other accounts). So in summary talk to Vanguard and set up an institution to institution transfer. They souls make this very easy as they want your money. And do not do any kind of rollover where you come into personal possession of the money.  If the check is made out to Vanguard but sent to you to resend to Vanguard that should not be an issue as that is still a trustee to trustee transfer.  Fidelity may have a minor account closer fee that will be deducted from the value of the account before it is sent. When I did this I sold the stock out of my 401k account.  Then transferred the cash to my rollover IRA account.  No tax event was created for me.  Make sure your rollover IRA account is listed as tax deferred.  If this still doesn't work for you then it could be a bug in Quicken and your best bet is the Quicken forums.  Good luck.