• Participating in an employer-sponsored 401(k) plan offers supplemental retirement savings. When you leave an employer, you have the option of leaving the assets in the employer plan or rolling them into an IRA. While your administrative costs may go up by rolling the assets over, you will have more investment options that were not available through the employer plan. Follow the IRS guidelines to make sure you comply with all rollover rules.
  
  

Sixty Day Rule

• You have 60 days to complete a rollover. This time frame begins on the day the funds are received. Once the funds are liquidated, a check will be sent to you that needs to be deposited into the new IRA account. These are calendar days, not business days, so make sure you contact the administrator if you haven't received your check in a timely fashion. Also make sure you allow for weekend downtime when submitting the check to the new IRA custodian. Violating the Sixty Day Rule will result in a distribution of the entire 401(k) with taxes and penalties assessed.
  
  

One Year Waiting Rule

• You are allowed to make one rollover per 12-month period. This rule applies regardless of how many 401(k) plans and IRAs you maintain. The IRS states that if "any part" of your 401(k) or IRA assets is rolled over, you cannot make any other rollover within one year of the rollover distribution. When you do a rollover, a 1099-R is generated. If you want to combine retirement assets but have already completed a rollover, you can do a transfer which moves the funds from custodian to custodian and doesn't generate a 1099-R.
  
  

Required Minimum Distributions

• If you are age 70 1/2 or older, you must take a Required Minimum Distribution (RMD) from your total retirement value. The RMD value is approximately 10 percent of your 401(k) or IRA value. If you are age 70 1/2 or older and are performing a 401(k) rollover, you must take your RMD prior to the rollover occurring. This means that the RMD distribution must happen prior to the liquidation and distribution of the rollover check. If you fail to do this, your RMD value will be considered an excess contribution and taxed as such. The penalty for excess contributions is 6 percent per year.
  
  

Ineligible Distributions

• Some distributions are not eligible for a rollover. These include annuitized payments where you receive a regular and consistent distribution over a 10-year period or longer. Dividends on employer securities are not eligible for rollovers nor are distributions made for hardship distributions.