Congratulations on your (REALLY) soon-to-be retired status!
To move your 401(k) to USAA without taxes or penalties, you will want to initiate a direct rollover of your plan balance into an IRA. Fortunately, the process for doing this is really pretty simple.
1. Open an IRA with USAA if you don’t already have one (or want a separate one). This can be done either online by visiting the IRA Section
of usaa.com or by contacting our team of salaried Financial Advisors at 800-771-9960. Though not an IRS requirement, occasionally investors will choose to keep their rollover dollars in a separate IRA especially if their other IRA accounts contain a mix of pre- and after-tax dollars.
2. Request withdrawal paperwork from your former plan sponsor and select the option for a direct rollover to an IRA.
3. Provide your IRA account information on the form as well as the other required information. The required information for rollovers to USAA can be found on our Direct Rollover Instructions
Please note that rolling a 401(k) Plan to an IRA requires that all investments be liquidated and cash be transferred. In a volatile market, this could result in the portfolio getting sold at a low point and the owner having no control over the timing of the transaction. If this is a concern, it is sometimes best to liquidate the holdings prior to submitting the paperwork.
So, that’s how you would go about rolling your plan to USAA but an additional (and very important) question is whether or not doing so is a good idea. Sometimes it will make sense to roll the funds over but sometimes it will make more sense to leave it where it is.
To get an idea of the things to consider when making this decision, I encourage you to take a look at this Old Retirement Plans
blog post I wrote on the subject. In it, I have outlined some of the most popular reasons why people choose the rollover path and also why some choose to leave the funds alone. Hopefully this post will give you some good ideas for making the decision in your situation.
If you decide to go through with your initial plan to roll the funds to an IRA with USAA, I encourage you to contact our team of salaried Financial Advisors at 800-771-9960. They can help you with account opening as well as give you ideas on appropriate investments for your situation.
Thank you for your question and best of luck in your retirement!