When switching jobs or retiring, one of the key financial decisions you’ll face is what to do with your 401(k) account. While some people choose to leave it where it is or cash it out, others opt for a rollover. This means transferring the funds to a new retirement account.
What many don’t realize is that some financial institutions actually offer 401(k) rollover bonus incentives as a way to attract new customers.
If you’re considering a rollover, this guide explains what a 401(k) rollover bonus is, how it works, and how you can qualify for one.
Understanding a 401(k) Rollover
A 401(k) rollover involves moving funds from your old employer-sponsored retirement plan to another qualified account, typically an IRA (Individual Retirement Account) or a new 401(k) at a different employer. This allows your savings to continue growing tax-deferred, without incurring early withdrawal penalties.
A rollover can be done directly, where the money goes straight from one institution to another, or indirectly, where the funds are given to you and must be deposited into a new account within 60 days. Most people opt for direct rollovers to avoid complications with taxes or penalties.
What Is a 401(k) Rollover Bonus?
A 401k rollover bonus is a financial incentive offered by some brokerages or banks when you move your retirement savings to them. It works much like a bank sign-up bonus: in exchange for transferring a certain amount of money, the institution rewards you with a cash bonus or promotional credit. The larger your rollover, the bigger the bonus you can earn.
For example, a brokerage might offer $200 for a $25,000 rollover or $1,000 for rollovers over $250,000. These bonuses are designed to attract your business and are especially common among large investment firms like Fidelity, Charles Schwab, E*TRADE, and Merrill Edge. SoFi explains this concept in a more comprehensive way, so you can hop on to their website and learn more about this.
How to Qualify for a 401(k) Rollover Bonus
Qualifying for a bonus usually involves meeting specific requirements. First, your rollover amount must meet the brokerage’s minimum threshold. These thresholds vary but often start at $5,000 or $10,000. Second, you typically need to keep the funds in the account for a certain period, usually 90 to 180 days.
You may also need to enter a promotional code when setting up the new account or contact customer support to ensure the bonus is applied. It’s important to read the terms and conditions carefully so you don’t miss out due to a technicality.
Tips for Choosing the Right Provider
When selecting where to roll over your 401(k), don’t let the bonus be your only deciding factor. Consider the following factors too:
- Fees: Are there annual account maintenance fees or trading commissions?
- Investment Options: Does the provider offer a wide range of mutual funds, ETFs, or managed portfolios?
- Customer Service: Is help available when you need it?
- Platform Usability: Is the app or website easy to navigate?
A solid bonus is a nice perk, but your retirement account should be managed with long-term growth in mind. Keep that in mind.
