Rollover IRAs

Don't forget to reevaluate your 401(k) when you change jobs

Consider consolidating your retirement assets and preserving their tax-deferred status by transferring them to a Dodge & Cox Funds Rollover IRA, which you can invest in our no-load, low-cost mutual funds.



What you need to know

When leaving an employer-sponsored 401(k) plan, you should carefully consider your options.

 

Potential Benefits

Considerations

Roll Over into an IRA

Potential Benefits

  • Continue making contributions to your retirement.
  • Your retirement can continue to grow, tax-deferred or tax-free, depending on the IRA type. 
  • Consolidate your various retirement accounts.

Considerations

  • You will not be able to borrow against the balance.
  • Potentially reduced protection from creditors.
  • Age requirement changes for Penalty-Free Withdrawals and RMDs. 
  • Unable to roll over in-kind.
  • Fees may be higher than the previous plan.

Roll Over into a New Employer’s Plan

Potential Benefits

  • Earnings accrue tax-deferred or tax-free, depending upon the type of plan (e.g., Roth).
  • Assets in an employer’s plan are generally protected from claims by creditors.
  • You may be able to borrow against the new 401(k).

Considerations

  • Different and/or possible limited range of investment choices.
  • Fees may be higher than the previous plan.
  • Some plans do not permit rollovers or rollovers in-kind.
  • The full plan may need to be rolled over to avoid taxes and penalties on any distribution from the prior plan. 
  • Different and/or potentially reduced range of services. 
  • New plan may have more limited distribution and loan options.

Cash Out

Potential Benefits

  • You will have access to cash if needed.
  • Possible penalty-free withdrawals depending on age and other requirements.

Considerations

  • Depending on your circumstances, taxes and penalties for cashing out can be substantial. 
  • The amount withdrawn will no longer grow tax-deferred and will no longer be invested in the market.

Leave in Former Plan

Potential Benefits

  • No immediate action required.
  • Earnings remain tax-deferred or tax-free until you withdraw them.
  • May have lower investment fees than a new 401(k) or IRA.

Considerations

  • No longer able to contribute to your former employer’s plan. 
  • Investment choices are limited to those made available in the former plan.
  • Managing across multiple accounts/plans can be difficult.
  • Possible fees for maintaining or distributing out of a terminated employee account. 
  • Investments might be subject to plan restrictions.
  • If the account balance is too small, some plans may not permit the assets to remain.


How to roll over your 401(k)

If you've decided to do a rollover, Dodge & Cox makes it easy for you to complete the process. A Rollover IRA is an individual retirement account that enables you to transfer and consolidate assets from an employer-sponsored retirement plan, such as a 401(k), 403(b), Government 457, or Thrift Savings Plan, if you’ve left a job or retired. Importantly, the Rollover IRA maintains the tax-deferred status of the retirement assets. You may maintain amounts rolled over from your employer’s retirement plan and make annual contributions in a single IRA.

1. Contact your former 401(k) plan administrator

It is up to your current plan administrator to determine what is required to accomplish a rollover into a Dodge & Cox Funds IRA. Before initiating a rollover, contact your current retirement plan administrator for their specific rollover instructions.
 

Helpful questions include:

  • Is a plan-specific rollover form required?
  • Is a medallion-guaranteed signature required?
  • Are there additional steps prior to initiating the rollover? (e.g.,  Am I required to move my assets to a cash account prior to  a rollover?)
  • Are there any maturity dates or short-term redemption fees  to consider? Is spousal consent required?
  • Will the plan administrator send the distribution check directly  to Dodge & Cox Funds (preferred) or to me? (Please note, if the  check is not payable to your Dodge & Cox Funds IRA, your  current custodian may be required to withhold for taxes, and a  penalty could apply to amounts that you do not rollover within  30 days after you receive the check.)
  • How long will it take the plan administrator to send my assets  to Dodge & Cox Funds?

2. Open your Dodge & Cox Funds IRA

Do you already have an IRA account at Dodge & Cox? Then you may not need to open a new one to transfer the assets from your 401(k). If you don't have an IRA yet, you can open one online. You can also call us at 800-621-3979,  8 a.m. to 7:30 p.m. Eastern Time, Monday through Friday, if you have any questions or need help. We can also assist you with completing the application over the phone.

3. Complete the Rollover to a Dodge & Cox Funds IRA

If you have not received a distribution check directly:

Upon receipt of the completed form(s),  we will contact your current custodian and request the assets to be sent to Dodge & Cox Funds via check.

Confirmation of the transfer of assets request will be mailed to your address of record. When we receive the check, we will invest your transferred assets according to your instructions and mail you a confirmation statement.

 

Please note, depending on your custodian, a direct rollover may take up to eight weeks to complete.
 

If you have received a distribution check:

Include the check when you submit the completed forms. The check must be payable to “Dodge & Cox Funds,” in the amount of the transfered assets. Please note, Dodge & Cox will not accept checks payable to a party other than your Dodge & Cox Funds IRA (third  party checks).

We will invest your transferred assets according to your instructions on the form and mail a confirmation statement to your address of record.

Mail the check to:

Dodge & Cox Funds
P.O. Box 219502
Kansas City, MO 64121-9502



Important Considerations

Direct vs. indirect rollover

A direct rollover enables you to transfer your savings directly from one retirement account to another. No money is withheld for taxes. An indirect rollover occurs when you cash out of your old retirement plan, but you must re-invest the funds you receive into a new plan yourself in 60 days or less to avoid early withdrawal penalties and taxes on the full amount you receive. Certain distributions, such as required minimum distributions, aren’t eligible for rollover.

Tax withholdings

If you elect a direct rollover, you will preserve the full tax-deferred status of your assets. If you chose an indirect rollover, the retirement plan administrator must withhold 20% of your cash distribution for federal income taxes. If you do not make up the 20% withholding amount with other funds, the 20% withholding amount will be taxable.  Any withholding will be applied toward to the amount you owe in taxes regardless of the extent to which you rolled over your distribution. Your plan administrator is required to provide you with information about direct and indirect rollovers and withholding taxes before you receive your distribution and must comply with your directions to make a direct rollover.

Take the next step

Open a Dodge & Cox Funds IRA today. Access our no-load, low-cost mutual funds to help you invest for your retirement goals.

FAQs about Rollover IRAs

Almost all distributions from employer plans, including 401(k) and 403(b) plans, are eligible for rollover to a traditional IRA. The main exceptions are payments over the lifetime or life expectancy of the participant (or participant and a designated beneficiary), installment payments for a period of 10 years or more, a loan treated as a distribution, required distributions from your retirement plan, and hardship withdrawals. 


All or part of an eligible rollover distribution may be transferred directly into your traditional IRA. This is called a “direct rollover.” Alternatively, you may receive the distribution and make a regular rollover to your traditional IRA within 60 days. By making a direct or regular rollover, you can defer income taxes on the amount rolled over until you make withdrawals from your traditional IRA. 

Note: If you elect a direct rollover, you will preserve the full tax-deferred status of your assets. If you chose an indirect rollover, the retirement plan administrator must withhold 20% of your cash distribution for federal income taxes. The withholding amount will be returned as a tax credit in the year you complete the rollover if you reinvest the funds in a new plan within the 60 day window. Your plan administrator is required to provide you with information about direct and regular rollovers and withholding taxes before you receive your distribution and must comply with your directions to make a direct rollover. 

 

The rules governing rollovers are complicated. Be sure to consult your financial or tax advisor or IRS Publication 590-A if you have questions about rollovers.

Yes, if you haven’t rolled over the assets from another traditional IRA within the previous 365 days. A regular rollover from one traditional IRA to another must be completed within 60 days after the withdrawal from the first traditional IRA. After making a rollover from one traditional IRA to another, you must wait one full year (365 days) before you can make another such rollover. However, at any time you may instruct a traditional IRA custodian to transfer assets directly to another traditional IRA custodian; this is called a “direct transfer” and is not considered a regular rollover. Accordingly, a direct transfer isn't subject to the 365-day waiting period described above.

Rollovers, if properly made, don’t count toward the maximum contribution limits. In addition, rollovers aren’t deductible, and they don’t affect your deduction limits as described above.

Yes, taxable distributions from qualified retirement plans or 403(b) arrangements are eligible for rollover or direct transfer to a Roth IRA. Under certain circumstances it may also be possible to make a direct transfer or rollover of a taxable distribution to a traditional IRA and then convert the traditional IRA to a Roth IRA. Consult your tax or financial advisor for further information.

You may transfer or roll over after-tax deferrals from a Roth account under an employer’s 401(k) plan or 403(b) arrangement to a Roth IRA. If such amounts are rolled over to a Roth IRA, they're subject to standard rules for the start date and holding period that apply to your Roth IRA(s).

Yes, if you haven’t received and rolled over the assets from another Roth IRA within the previous 365 days. The rollover must be completed within 60 days after the withdrawal from your first Roth IRA. After making a rollover from one Roth IRA to another, you must wait one full year (365 days) before you can make another such rollover. However, at any time you may instruct a Roth IRA custodian to transfer assets directly to another Roth IRA custodian; this is called a “direct transfer” and isn't considered a rollover. Accordingly, a direct transfer isn't subject to the 365-day waiting period described above.

Rollovers, if properly made, don’t count toward the maximum contribution limits. Also, you may make a rollover from one Roth IRA to another even during a year when you aren't eligible to contribute to a Roth IRA.

Disclosures

Tax laws and regulations are complex, and subject to change, which can materially impact investment results. Dodge & Cox cannot guarantee that the information herein is accurate, complete, or timely and makes no warranties with respect to such information, including your use of, or any tax position taken in reliance on, such information. Only Dodge & Cox Funds are available for purchase in a Dodge & Cox Fund IRA Account. Investment options available through an employer's retirement plan or other IRA providers and any associated fees and expenses will differ. Consult with a tax or legal advisor before making any investment decision.

 

We’re here to help

Call

800-621-3979

Monday – Friday,

8 a.m. – 7:30 p.m., Eastern time.

Mail

Regular Mail

Dodge & Cox Funds

P.O. Box 219502

Kansas City, MO 64121-9502

 

Express Mail

Dodge & Cox Funds

430 W Seventh Street, Ste 219502

Kansas City, MO 64105-1407