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When you leave a job, you often face deciding between your 401(k) or other retirement plans. At your direction, your employer can transfer your distribution directly to another qualified plan or a rollover individual retirement account (IRA).
A rollover is when you withdraw cash or other assets from one eligible retirement plan and contribute all or part of it within 60 days to another eligible retirement plan. Under this option, you would direct your plan administrator to make a direct and tax-free transfer of funds from your former employer’s plan to a rollover IRA at a financial institution of your choice. That way, you maintain the tax-deferred status of your retirement account, consolidate all retirement accounts for easier management, and benefit from increased investment flexibility.
Fidelity Interactive Content Services LLC ('FICS') is a Fidelity company established to present users with objective news, information, data and guidance on personal finance topics drawn from a diverse collection of sources including affiliated and non-affiliated financial services publications and FICS-created content. Merrill Lynch Life Agency Inc. ('MLLA') is a licensed insurance agency and wholly owned subsidiary of BofA Corp. Trust and fiduciary services are provided by Bank of America, N.A., Member FDIC, or U.S. Trust Company of Delaware. Both are wholly owned subsidiaries of BofA Corp.
When deciding which financial institution to roll your 401(k) assets into, research the incentive matches and bonuses that some companies offer and be sure to read the fine print in great detail.
Key Takeaways
- At your direction, your employer can transfer your distribution directly to another qualified plan or a rollover individual retirement account (IRA).
- A rollover is when you withdraw cash or other assets from one eligible retirement plan and contribute all or part of it within 60 days to another eligible retirement plan.
- Research the incentive matches and bonuses that some companies offer and be sure to read the fine print in great detail.
Most of the bonuses require you to deposit the money within 60 days of opening the account. All need the account to remain open and fully funded with the initial bonus amount for at least 12 months, or they can reverse the bonus amount.
Below are four financial institutions offering cash bonuses for rolling over your retirement accounts, as of February 2019.
TD Ameritrade
If you are interested in rolling assets into a self-managed trading financial institution, TD Ameritrade would be an excellent option. The company offers six different thresholds for its bonus program besides providing the most significant cash bonus out of all the IRA rollover incentive programs in the industry.
At a minimum, if you roll at least $10,000 or more into an IRA, you would qualify for 90 days of commission-free trades (up to a maximum of 300 trades). If you have a balance of $1 million or more from your 401(k) or retirement plan to transfer, TD Ameritrade will add a bonus of $2,500 into your new rollover IRA. Below are the threshold levels and corresponding cash bonus amounts. Each of these bonuses comes with 90 days of commission-free trades as part of a promotion valid through June 30, 2019, according to its website.
- $2,500 cash bonus for $1 million or more deposit
- $1,200 cash bonus for $500,000 - $999,999 deposit
- $600 cash bonus for $250,000 - $499,999 deposit
- $300 cash bonus for $100,000 - $249,999 deposit
- $100 cash bonus for $25,000 - $99,999 deposit
Merrill Edge
Merrill Edge is the self-directed investment subsidiary of Bank of America and the brokerage company Merrill Lynch Wealth Management. Merrill Edge has seen success through its cross-selling to current Bank of America clients who report finding it easy to incorporate its services into their current bank accounts.
Merrill Edge will pay a cash bonus if you deposit a qualifying amount into either an IRA or non-qualified account called a cash management account (CMA). If you deposit a minimum of $20,000, Merrill Edge offers a cash bonus of $100. If you deposit $50,000, you will receive a $150 cash bonus and are eligible for up to 30 commission-trades per month. Below is the list of the qualifying asset deposit levels and cash bonus amounts.
- $600 cash bonus for $200,000 or more deposit
- $250 cash bonus for $100,000 - $199,999 deposit
- $150 cash bonus for $50,000 - $99,999 deposit
- $100 cash bonus for $20,000 - $49,999 deposit
Ally Bank
Ally Bank is a popular choice for customers seeking higher-than-average yields on its certificate of deposit and savings accounts. This online bank offers no maintenance fees on savings, checking, or money market accounts and certificates of deposit. As of February 2019, Ally is offering cash bonuses for new self-directed trading accounts, including rollovers from a 401(k). According to its website, if you open an account by April 30, 2019, and fund it within 60 days of opening, Ally will give you a cash bonus and up to 60 days of free commission-free trades.
The minimum qualifying deposit is $10,000, which will earn you $50, and the 60 days of free trades. For those with more to invest, Ally is offering as much as $3,500 if you deposit $2 million or more. Other offers on new deposits – all of which include 60 days of free trades – include:
- $2,500 cash bonus for $1 million - $2 million deposit
- $1,200 cash bonus for $500,000 - $999,999 deposit
- $600 cash bonus for $250,000 - $499,999 deposit
- $300 cash bonus for $100,000 - $249,999 deposit
- $200 cash bonus for $25,000 - $99,999 deposit
Fidelity Investments
Fidelity Investments, best known for its mutual funds, also offers extensive brokerage services. With more than $2.5 trillion in assets under management, Fidelity offers low-cost commission fees on most trades, and more than 500 commission-free ETFs. While not technically a bank, it is a financial institution that is offering cash bonuses for rollover accounts, according to its website.
Fidelity is offering cash bonuses to new and existing customers who rollover funds into a new IRA or brokerage account.
- $5,000 cash bonus for $1,000,000 to $2,499,999 deposit
- $3,500 cash bonus for $2,500,000 to $4,999,999 deposit
- $2,500 cash bonus for $1,000,000 to $2,499,999 deposit
The cash bonus offer does not apply to rollovers from an employer 401(k) with assets kept or managed by Fidelity. The offer is subject to change.
While Fidelity does not include free trades in its website, calls to two customer service representatives indicated that new customers could negotiate a limited number of commission-free trades for use following account opening.