I still have a 401k account with my former employer. I would like to
transfer this account into my IRA. Can this be done? If so, are there any
penalties?
Answer: Not a problem. Simply contact your former employer and ask for
the necessary form(s) to complete what is generally called a
“trustee-to-trustee” transfer into an IRA. Open your new IRA before the
transfer so that you can provide the account information on the forms. There
are no penalties, but if you allow your former employer to send the funds
directly to you and not to your new IRA, they will be required to deduct and
remit 20% of the total to the IRS - so don’t let this happen.
